Just Rs 250 a month: SEBI chief bats for small-sized SIPs

Over the next three years, increasingly more number of investors would be able to invest in mutual funds (MF) through systematic investment plans (SIP) with as little as Rs 250 a month, said Madhabi Puri Buch, chairperson, Securities and Exchange Board of India (SEBI), India’s capital market regulator).

Buch spoke at the event organised by SBI Mutual Fund, India’s largest mutual fund, commemorating the fund house’s milestone of reaching Rs 10 lakh crore in assets under management (AUM). “The Rs 250 SIP would not only be real, but it would be hugely profitable for our industry. We will see financial inclusion along with profitability of the industry; that is my belief,” Buch said. “The magic is sachetisation of MF products and that’ll lead the growth of the Indian MF industry in the next three years,” she added.

Most fund houses have SIPs that mandate a minimum investment of at least Rs 1,000 a month. Some fund houses allow Rs 500 SIPs, only a handful of fund houses allow investors to invest with as little as Rs 100 a month. Buch acknowledged the fact that presently, it is financial unviable to run such micro-sized SIPs at a large scale. But technology, she added, would bring this cost down in future.

“Technology, so far, has enabled cost reduction; we fail to recognise and celebrate. The idea really is bring down the cost, so that the bottom of the pyramid (investors with lower income, or lower disposable income left to invest) can come into mutual funds,” she said at the event. This, she explained, would lead to a “tremendous growth of the Indian mutual fund industry.”