MUMBAI: The largest fund house SBI Mutual Fund has become the first asset manager to launch the much-awaited and much-talked about sachetised SIPs or micro systematic investment plans (SIPs) starting at per unit investment as low as Rs 250.
Launching the product in Mumbai on Monday flanked by SBI chairman SC Setty, Sebi chairperson Madhabi Puri Buch, who conceptualised the low investment SIP, said; "...it was one of my fondest dreams", and that the scheme will go a long way in providing affordable investment opportunities to a larger part of the society.
The micro SIPs are being launched by SBI MF in partnership with State Bank of India under the ‘Jan Nivesh SIP' scheme and currently micro SIPs will be offered only for the SBI balanced advantage fund. Buch further said such low-ticket investments could play a crucial role in wealth creation for millions of households, especially in ensuring a bright financial future for young girls.
On January 22, Sebi had released a consultation paper to encourage distributors to promote the low-cost SIPs, and suggested a Rs 500 incentive for educating first-time investors in mutual funds and supporting sustainable long-term investments.
On the significance of this initiative, she noted even on global platforms foreign investors find it hard to believe that a Rs 250 monthly investment can be viable and complemented the industry stakeholders for working together to make this model sustainable. One of the key challenges in launching micro-SIPs has been ensuring economic viability, Buch said and noted that while banks and financial institutions previously introduced Rs 100 and Rs 500 SIPs, they were not widely promoted due to high operational costs.
“To make it work, we had to ensure that the break-even period was within two to three years. If it exceeded that, we knew that no CEO would push it,” she said, adding the entire MF ecosystem, including registrar and transfer agents, KYC registration agencies, and depositories, collaborated to make this feasible. State Bank chairman Setty said the bank will waive transaction charges for bank transfers related to these micro-SIPs.
“Transaction charges, when compared to the small SIPs were significant. By removing these charges, we are ensuring that every rupee invested goes towards wealth creation,” Buch said and described SBI’s decision as “the icing on the cake.”Buch further said technology plays an important role in making small-ticket investments viable.
“The scale that we are able to achieve, and the fact that it is profitable, is because of the deployment of technology. This is the biggest and best manifestation of how financial inclusion can be made sustainable,” she said.
Buch also initiatives like Jan Nivesh will help bridge the gap between the urban and rural markets, ensuring that wealth creation reaches even the remotest corners of the country.
“This is really what we are talking about—an India where wealth is created and distributed among all, no matter how small the amount. Jan Nivesh is a vision of an inclusiveness,” she stated.