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SEBI has recently proposed introduction of micro-SIP of Rs.250 in mutual funds to increase the penetration of mutual funds.
In addition, SEBI has also proposed introduction of an incentive of Rs.500 for MFDs and execution only platforms for bringing in SIP of Rs.250.
DP Singh, Deputy MD and Joint CEO, SBI Mutual Fund said that micro SIP will be the game changer for the MF industry. He said, “This is a step in the right direction. Not many people are currently participating in mutual funds; if steps are taken to bring in more investors, micro SIP will be a great way to introduce mutual funds to new investors.”
Madhu Nair, CEO, Union Mutual Fund said that allowing fund houses to leverage IAP corpus will help the industry in this endeavour. He said, "Right now it is at a consultation stage but it is a great move. From a cost perspective, SEBI may allow AMCs with fund houses to recover the incurred costs from the Investor Education and Awareness Fund. Also, a few proposals like payment of incentive to MFDs after 24 instalments and applicability of this incentive on bringing in new investors will increase the penetration of mutual funds in a big way.”
Ravi Kumar Jha, MD and CEO of LIC Mutual Fund, said, "The proposal will help AMCs to mitigate the cost barriers related to small value SIPs and incentivize MFDs to opt for them. We currently have only about 5 crore unique investors while there are about 60 crore Indians who have linked their PAN and Aadhaar. So, small value SIPs can help the industry to reach new investors and start the habit of investing."
Delhi MFD Ajay Sharma, President, All-Mutual Fund Distributors Welfare Association (AMDwA) feels that micro SIP will be the Jan Dhan movement for the mutual fund industry. It can boost penetration in B30 cities, smaller town and villages, making SIPs affordable for people at the lower end, he said.
Gurgaon MFD Ashish Chadha of Chadha Investment Consultant points out that while the penetration of the MF industry will increase because of micro SIP, industry should equip itself to deal with issues like unavailability of PAN, improper KYC documents, which are some common issues among low income group. MFDs will have to put in lot of efforts to bring in investors from low income group, he added.
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