Promising Start: Key Stakeholders Bullish On Micro-SIPs, But See Long Road Ahead

Small-ticket systematic investment plans are of to an encouraging start, according to industry experts.

Over 100,000 lakh Jan Nivesh SIPs have been registered in the span of the past two months or so, said DP Singh, deputy managing director and joint chief executive officer at SBI Mutual Fund. In what is an encouraging trend, most of these accounts are from beyond the top 30 cities and almost 60-70% of them are do-it-yourself accounts opened online, Singh said.

Meanwhile, LIC Mutual Fund has opened about 60,000 accounts since the launch of Rs 100 'pocket SIPs' in mid-September last year, according to Nikhil Rungta, co-chief investment officer – equity at LIC MF.

The Securities and Exchange Board of India too, in a bid to make SIPs more accessible, proposed the sachetisation of mutual funds. Sachetisation of mutual funds will enable small ticket investment in mutual funds gradually on periodic basis, it stated in a consultation paper published earlier this year.

Many asset management companies do offer SIPs with small ticket size under some of their schemes. The product proposed to be offered under the sachetised mutual funds with small ticket SIPs of Rs 250, offering discounted rates, provide an opportunity to the entire industry to participate, the consultation paper by SEBI said.

The option of Rs 100 daily SIPs by LIC MF for existing schemes primarily caters to daily wage earners, Rungta also said. "When we go to meet MFIs with client base largely comprising of daily wage earners, we see these companies collect money on a weekly, fortnightly or monthly basis," Rungta explained. These workers may earn about Rs 500-600 a day and if asked to do a SIP for Rs 1,000 or Rs 1,500 on a monthly basis they might be unable to, Rungta said, adding that they, however, can set aside Rs 100 a day out of the day's earnings.

Singh considers the response to micro SIPs good, "but not amazing", while noting that it will take time to create a proper ecosystem.

Given that the markets have remained volatile and have seen drawdowns, these numbers are commendable, Rungta said.

The scheme needs a lot of support and we are constantly working with the regulator, intermediaries and RTAs to improve the ease of opening these accounts, Singh said. Acquisition time is currently still long, as is the time being taken to onboard, he said.

"Though some of the practices has been improved because of India's fintech infrastructure, we are working very hard to overcome other challenges", Singh said.

These are not profitable products for mutual funds, Rungta noted. They become profitable over a longer period of time when that person continues to invest over many years.