Over the last few years, there are has been a surge of new investors in capital markets. While direct investing in the stock market has grown, with lakhs of new demat accounts opened, many more have turned to mutual funds for wealth creation through systematic investment plans (SIPs). In order to broaden the investor base, the Association of Mutual Funds of India (AMFI) recently launched the Rs 250 SIP initiative.
Former Securities and Exchange Board of India Chairperson Madhabi Puri Buch during her tenure had been pushing for such a micro-SIP initiative across the mutual fund industry, so that every one could get access to a safe, regulated financial investment market.
"The concept of the bottom of the pyramid and making it profitable is here and now, thanks to technology. And to my mind, this is perhaps going to be the biggest and best manifestation of that," she said at the launch of the JanNivesh SIP product by SBI Mutual Fund, the country's largest asset manager.
According to AMFI, its Chhoti (small) SIP initiative is designed to make mutual fund investing more accessible, particularly for first-time investors and those from underserved segments.
Essentially, the idea was that small traders, the unorganised work force or even rural labourers should be able to access the formalised investment ecosystem.
"The intent is to look at how we can serve the larger pool of people by making it more attractive. A Rs 250 SIP may seem a large amount, but if you do a daily SIP, its like Rs 10 a day. From a savers point of view its very good," said A. Balasubramanian, the MD and CEO of Aditya Birla Sun Life AMC.
To be sure, a few mutual funds had already been offering small SIPs. But, the Chhoti SIP, an industry-wide initiative would significantly enhance its impact, said Sachin Jain, managing partner at Scripbox, a wealth management platform.
"A collective push backed by SEBI and AMFI ensures greater visibility, regulatory support, and structured educational initiatives that can drive adoption," he said.
But, the success of this initiative hinges on financial literacy and investor education, he felt.
"Educating investors about the why and how of investing will be crucial in ensuring long-term participation. Over time, this initiative can help lower-income investors break free from the cycle of debt, build disciplined savings habits, and plan their financial futures more effectively," noted Jain.
Some fund houses were already offering SIP of even Rs 100 a month. But, such initiatives were not pushed or marketed much as they were not lucrative. And that will be a key here.
"There is an ecosystem of the payment aggregator, the payment gateway, setting up the SIP, registrars... the absolute cost of all of that on a Rs 100 or Rs 250 SIP generally becomes very high in terms of basis points. So, it's very important to solve the cost structure. And I think that is the whole objective with which AMFI and SEBI are working together, that for these smaller ticket SIPs, how do we ensure that the cost structures are also lesser," said Kalpen Parekh, MD and CEO of DSP Mutual Fund.
Balasubramanian of Aditya Birla Sun Life AMC believes that breakeven can be achieved in around 2-3 years. He is hopeful that once the investor starts a Rs 250 SIP, over time she will increase the amount, so the pool will only keep rising.
"For a country of our size and scale, and while we have 150 crore people, not everyone has wherewithal to save a larger amount every month. It will be very encouraging to see more and more people joining capital markets through SIP as a route," said Parekh.
The launch of this initiative comes at a time equity markets have been falling amid huge sell-off by foreign institutional investors. With the benchmark large cap indices down 15-16 per cent from their peak, many worried investors have possibly been stopping their SIPs. Recent data from AMFI for January 2025 indicated that there had been more SIP cancellations than new SIP registrations.
Educating the first time investors to invest in SIPs at a such a juncture, could be challenging. Also, explaining them the importance of riding the cycles and staying invested over a long-term, will be important.
