Context:
The number of cancelled Systematic Investment Plans (SIPs) surged to 162.3 lakh in April 2025, more than three times higher than the previous month. This increase was driven by the implementation of SEBI‘s new cancellation norms, not investor panic.
- A Systematic Investment Plan (SIP) is a disciplined method of investing in mutual funds at regular intervals.
- Investors can begin with as little as ₹500/month.
- SIPs help in rupee cost averaging and promote long-term wealth creation.
Cancellation Norms Of SEBI
- SEBI Circular (3 January 2024):
- Introduced strict guidelines for automatic cancellation of SIPs:
- Daily, weekly, monthly, and fortnightly SIPs: Cancelled after 3 consecutive failed instalments.
- Quarterly and bimonthly SIPs: Cancelled after 2 missed payments.
- Introduced strict guidelines for automatic cancellation of SIPs:
- Mandatory SIP Cancellation Timeline:
- AMCs must process investor SIP cancellation requests within 10 days.
- Improved Data Transparency:
- SEBI directed AMFI and AMCs to reflect active contributing SIPs only, cleaning up legacy data from inactive accounts.
- Cleanup began in Dec 2024–Jan 2025, completed in April 2025.
- SEBI directed AMFI and AMCs to reflect active contributing SIPs only, cleaning up legacy data from inactive accounts.
Significance of SEBI’s Move
- Ensures accurate reflection of active investor participation.
- Promotes data reliability for stakeholders and market participants.
- Aims at enhancing investor transparency and efficient functioning of mutual fund systems.
Related SEBI Update (March 2025)
- SEBI reduced the timeline for completing rights issues to 23 days, expediting capital-raising for companies.
- Full Form: Securities and Exchange Board of India
- Established: 12 April 1988 (Statutory powers since 30 Jan 1992 under SEBI Act, 1992)
- Headquarters: Mumbai, Maharashtra
- Chairman: Tuhin Kanta Pandey
