The Securities and Exchange Board of India (SEBI) is planning to take a bold step towards financial inclusion by exploring ways to make investing in mutual funds as low as Rs 250 per month a viable reality. Madhabi Puri Buch, SEBI Chairperson, emphasized at a recent media event that lower SIPs can bring greater resilience to the Indian equity markets.
This effort underscores SEBI's commitment to access financial inclusion and promote a stronger, more dynamic equity market in India. By making mutual funds more accessible to a broader range of investors, SEBI aims to empower individuals and contribute to the overall health and stability of Indian financial growth. SEBI is actively collaborating with the industry to address cost concerns and explore innovative solutions, drawing inspiration from successful efforts like FMCG sachet introductions.
Interestingly, few fund houses do offer SIPs as low as Rs 100, though it is not an industry standard as of now.
Industry reaction
Industry experts believe that the smaller SIP could act as a good entry point for many new investors, and once they become comfortable with the concept of mutual fund investing, they could switch to bigger SIPs. While smaller SIPs may not be viable for a fund house from a cost perspective, they say that it is believed that they could serve as a stepping stone for investors to transition to larger SIPs once they become more familiar with the concept.
While smaller SIPs may not directly lead to higher profits for the market, they can indirectly contribute to a strong and resilient financial network, which can support long-term growth and stability. Few industry players feel minimum SIP investments will encourage more individuals to participate in the market and promote a culture of disciplined saving and investing, which will help create a strong foundation for future growth in the Indian equity market.
The current minimum investment
The investment for starting an SPI is currently Rs 500. The SEBI has recognized the minimum investment amount in mutual funds for lump-sum investments at Rs 100 and in SIPs for Rs 500. Although the minimum investment amount could be higher in some mutual funds,.
November's Trillion Fund Milestone |SIP
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Stepping stone to lesser investments
Smaller SIPs can help inculcate a disciplined savings habit among Indian investors, particularly those with limited financial resources. Regular, small investments can add up over time, potentially generating significant returns for long-term investors.
Smaller SIPs, those with a monthly investment of Rs 250, can indeed contribute to the growth and resilience of Indian equity markets. By making mutual fund investments more accessible to a broader range of investors, smaller SIPs can help increase participation in the market, leading to a more diversified investor base. This, in turn, can help stabilize the market and reduce volatility, making it more attractive to both domestic and international investors.
“Meanwhile, did you know India’s first mutual fund was established in 1963, when the United Trust of India (UTI) was formerly joined by the Government of India and the Reserve Bank of India”.
