Introduction
In a move aimed at expanding financial inclusion and instilling disciplined investing habits, the Securities and Exchange Board of India (SEBI) has proposed a minimum Systematic Investment Plan (SIP) ticket size of just ₹250. While this initiative has garnered support from some of India’s leading Asset Management Companies (AMCs), it has also sparked an industry-wide debate about its long-term feasibility and operational sustainability.
The Objective: Inclusion Over Exclusivity
SEBI’s vision aligns with the broader goal of democratizing investing bringing first-time investors, low-income earners, and even students into the mutual fund ecosystem. This could prove transformational, especially in tier-2 and tier-3 cities, where entry barriers have traditionally been high due to financial literacy gaps and affordability constraints.
SBI Mutual Fund, India’s largest AMC with over ₹11 lakh crore in assets under management, has launched the ‘JanNivesh SIP’ at ₹250. Similarly, Kotak Mahindra AMC rolled out its ‘Choti SIP’, making mutual funds more accessible via popular investment platforms like SBI YONO, Paytm, Groww, and Zerodha. Zerodha Fund House went a step further, offering SIPs as low as ₹100 in its Nifty LargeMidcap 250 Index Fund reaffirming its commitment to SEBI’s inclusion agenda.
The Ground Reality: Economics of Scale vs. Cost Constraints
Despite the intent, the proposal is not without hurdles. Mutual Fund houses that operate under a regulated Total Expense Ratio (TER) typically around 1% find themselves in a financial bind. With operational costs such as KYC processing, payment gateway fees, and registrar charges estimated between ₹40 to ₹60 per investor annually, the ₹250 SIP would generate only about ₹30 per year in revenue per investor, resulting in a net loss.
This cost-revenue mismatch has prompted caution among several AMCs, many of whom are yet to adopt the ₹250 SIP model. Industry leaders argue that unless the model achieves massive investor volumes, sustainability will remain elusive.
Voices from the Industry
Ganesh Mohan, CEO of Bajaj Finserv Asset Management, points out that technology and advisory efficiencies will be key in achieving breakeven. “While passive funds can absorb lower costs, active funds require higher ticket sizes typically around ₹3,000 to generate investor-level profitability,” he notes.
From Habit to Habitual Wealth Creation
Despite the financial strain, many industry experts advocate the long-term social value of ultra-low SIPs. Mirae Asset offers ₹99 SIPs and views SEBI’s ₹250 threshold as a balanced middle ground enough to cultivate investor discipline while also partially covering AMC costs.
As Nikhil Rungta, Co-CIO Equity at LIC Mutual Fund Asset Management Ltd., explains, “Ultra-low SIPs are not a rollback but rather a refinement of the inclusion strategy. They serve as the stepping stones for wealth creation, especially for young earners and financially underserved populations.”
Our View at RURASH Financials
At RURASH Financials, we believe that investor participation should never be limited by affordability. The evolution of SIPs from ₹500 to ₹100 and now a standardized ₹250 benchmark reflects the industry’s adaptability and commitment to financial democratization.
We acknowledge the concerns around operational viability, but we also see immense potential in digital distribution, tech-enabled KYC, and scalable investment platforms that can offset these challenges. For AMCs and distributors alike, this is an opportunity to reimagine cost structures and embrace digital transformation for the long-term benefit of India’s retail investors.
Conclusion
SEBI’s ₹250 SIP initiative is not just a regulatory change it’s a strategic nudge toward building a nation of investors. While economic feasibility must be addressed, the broader mission of financial empowerment, habit formation, and investor inclusivity is worth pursuing.
As India’s investment ecosystem matures, such micro-initiatives can create macro-impact nurturing a financially aware, habit-driven, and investment-ready population.