'₹250 SIP': SEBI chief says small-sized plans will power MF industry's growth

Small systematic investment plans (SIPs), starting with as low as ₹250 per month, will power the Indian mutual fund industry's growth over the next three years, said SEBI chairperson Madhabi Puri Buch on Friday, July 19.

Buch, who was speaking at an event organised by SBI Mutual Fund in Mumbai, said an increasingly more number of people would be able to invest in mutual funds with the rollout of micro-sized SIPs.

Currently, most of the fund houses offer SIPs with a minimum monthly contribution of ₹1,000, and some offer plans with a contribution of around ₹500.

According to Buch, small-sized SIPs could be financially unviable for some fund houses at this point of time, but going forward the cost will come down due to the advancements in technology. "The idea really is to bring down the cost, so that the bottom of the pyramid can come into mutual funds,” she reportedly said.

MF industry on the rise

The Indian mutual fund (MF) industry, which has witnessed over five-fold growth in assets under management (AUM) in the last ten years, is well on track to surpass the ₹100 lakh crore AUM mark in the next two to three years, notes ICRA Analytics in its report dated July 19.

The industry’s AUM, which had crossed the ₹50 lakh crore mark for the first time in December 2023, has surpassed ₹60 lakh crore in a span of just six months and stood at ₹61.16 lakh crore in June 2024, the report added.

On a month-on-month basis, the net AUM increased by nearly 4% from ₹58.91 lakh crore in May 2024. The sum total SIP contributions for the first half of 2024 surpassed ₹1 lakh crore level and stood at ₹1.20 lakh crore, the report added.

"The resilience of the Indian financial market and improved growth prospects of the Indian economy is boosting investor confidence leading to increased participation of retail investors. This is auguring well for the mutual fund industry, which has been witnessing a robust growth in inflows and a surge in contribution through the SIP route," said Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics.