Capital market regulator Sebi has sought public comments to its 'Small Ticket Systematic Investment Plan', widely talked about as the Rs 250 SIP, through a consultation paper it released on January 22.
Sebi is proposing that the small ticket SIP (Rs 250 SIP) may be restricted to only three plans, one each in up to three Asset Management Companies.
Mutual fund industry participants have agreed to offer 'discounted rates' to enable faster break-even for AMCs on cost incurred towards these investments. The AMCs can offer SIPs beyond three small ticket SIPs, but the discounted rates offered by intermediaries are restricted to only first three.
Earlier this month, Sebi Chairperson Madhabi Puri Buch had said that Rs 250 SIP would be launched soon, as a way to expand financial inclusion.
The regulator has proposed that part of the cost incurred by AMCs along with certain incentives are proposed to be compensated from the Investor Education and Awareness Fund, to help reduce the break-even time and encourage further penetration. Sebi estimates that these measures would help the AMCs incurring the cost of small ticket SIP to break-even within two years.
Read More: At Rs 250 a month, Sebi chief bats for small-sized SIPs
The lower costs offered by stock exchanges, depositories, RTAs and KRAs for small-ticket SIPs are only for the first three small-ticket SIPs, Sebi has proposed.
The proposed 'sachetisation' of mutual funds is aimed at promoting financial inclusion and systematic saving, along with facilitating investment of small savings by investors new to mutual funds.
Investors would be able to pay for the small ticket SIP only through National Automated Clearing House (NACH) mandate, and Unified Payment Interface (UPI) auto pay, said the paper. Sebi has also proposed that the Rs 250 SIP be offered under the 'Growth option' of the plan.
To ensure the benefits are directed at new and small investors, all existing investor or investor with any SIP other than small ticket, or those making lumpsum investments are excluded from this category. The proposal invites investment of up to Rs 50,000 per investor, per mutual fund, per year without PAN, however, Aadhaar would be required to verify the investor.
The small-ticket SIP is primarily designed to be for monthly SIPs, but the option of fortnightly SIPs may also be enabled, said Sebi, statin that this would reduce the transaction cost and lower the breakeven time for AMCs. The consultation paper mentions a commitment by investors for five years, or 60 investments, however, should the investor desire to stop the SIP or withdraw investment prematurely, there would be no restriction on it.
Debt schemes, sectoral and thematic funds, small and midcap schemes will not able to offer small-ticker SIPs. Comments and suggestions can be shared with the regulator by February 6, 2025.
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