Sebi is working with mutual funds to create a new ₹250-per-month micro-SIP, according to Sebi Chairperson Madhabi Puri Buch. This initiative aims to improve financial inclusion in India by offering a low-cost investment option.
What are micro-SIPs and who can use them?
Micro-SIPs are a budget-friendly version of traditional systematic investment plans (SIPs). Instead of the usual minimum of ₹500 per month, micro-SIPs only require ₹50 to ₹100 monthly. They are aimed at people with smaller incomes, such as those living in rural areas, daily wage earners, and students. Aditya Birla Sun Life Mutual Fund is working on India’s first ₹250-per-month SIP. Currently, there are 93 million SIP accounts in India with a total value of ₹23,332 crore.
Why is Sebi introducing this new size?
Sebi’s goal is to make investing accessible to more people, similar to how small shampoo sachets reach a wider audience. They believe that by using India’s digital infrastructure, they can make investing easier for everyone. The new micro-SIP option is seen as a way to start financial inclusion, potentially turning small investors into large ones in the future.
Are micro-SIPs a new idea?
Micro-SIPs aren’t entirely new. Some mutual funds already offer SIPs with a minimum contribution of ₹50 to ₹100, and Navi AMC even has SIPs for ₹10 per month. However, the new ₹250-per-month SIP aims to cover a wider range of investors.
What are the benefits of micro-SIPs?
Micro-SIPs help small investors participate in financial markets without significant costs. They also benefit asset management companies by diversifying their investor base. Such investors are less likely to withdraw their money during tough times due to their smaller investments. The real impact of micro-SIPs will be seen if regulatory changes increase the number of investors in this segment.
What do mutual funds think about micro-SIPs?
Many mutual funds and distributors see micro-SIPs as less profitable and more challenging to manage. Handling many small transactions can be complex, with higher costs for processing payments and maintaining records. Reaching potential investors in remote areas also requires extensive effort.
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