Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch believed that smaller systematic investment plans (SIPs) in mutual funds can lead to greater financial inclusion, and will also lay the foundation for future growth as well as greater resilience of Indian equity markets.
Capital markets regulator is working with mutual fund houses to make Rs 250 SIP viable for the industry, she said while addressing a media event on Saturday.
“We are working with them to see where that cost is and what SEBI can do to facilitate in making it possible to bring that viability down to Rs 250 a month. Then it would be equivalent to what Hindustan Unilever did with shampoo sashes. It will bring in financial inclusion and, equally importantly, it will give strength to our markets,” Buch said.
She also explained how lower SIPs can bring greater resilience to the Indian equity markets.
“Unlike other emerging markets, India was resilient. That was because retail money came in to fill that vacuum, both via direct investments by retail investors as well as through mutual funds,” she said.
“The people who left India started underperforming their benchmark index, and very soon, they returned because they could not afford to miss out on the Indian return. Therefore, in effect, the benefit of our domestic flows and the retail flows had a double impact. The impact of domestic money coming in and the impact of the foreign money returning,” she said.
SEBI has also been concerned about retail investors seeking unsolicited advice who often turn to unregistered advisers who run illegal or quasi Portfolio Management Services (PMS) in the garb of investment advice and end up putting their money in risky investments or strategies.
Notably, the mutual fund industry in India has recently marked the total assets under management (AUM) of nearly Rs 50 Trillion mark.
As per the recent data released by the Association of Mutual Funds of India (AMFI), the mutual fund industry’s AUM reached Rs 49.04 trillion in November, boosted by the benchmark indices hitting all-time highs during the month.