Source: IE
Context: The Securities and Exchange Board of India (SEBI) is introducing a sachetisation plan to enable small-ticket systematic investment plans (SIPs) starting at ₹250 per month.
About Sachetisation of Mutual Fund Investments:
- What is Sachetisation?
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- A strategy inspired by FMCG products offering small, affordable units (e.g., shampoo sachets) to penetrate price-sensitive markets.
- Applied to financial services, it allows low-income investors to enter mutual funds through smaller, affordable investments.
- Need for Sachetisation:
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- Financial Inclusion: Targets underserved, low-income groups to enable investment in mutual funds.
- Addressing Barriers: Overcomes the high entry costs of traditional mutual fund SIPs.
- Market Deepening: Expands the retail investor base in equity markets, stabilizing market flows against foreign investor volatility.
- Aim of Sachetisation:
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- Encourage small-ticket SIP investments to democratize access to financial products.
- Foster long-term savings and wealth creation, particularly for low-income investors.
- How it works:
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- Minimum SIP Amount: ₹250/month (targeted at new mutual fund investors).
- Eligibility Criteria:
- Available for new investors only.
- Maximum of three ₹250 SIPs per investor across asset management companies (AMCs).
- Schemes Excluded: Debt schemes, sectoral, thematic, small-cap, and mid-cap equity funds due to their volatility.
- Commitment Period: Investors encouraged to commit to 5 years (60 instalments), but premature withdrawal is allowed.
- Technology-Driven Process: Investments through UPI auto pay or NACH to minimize costs.
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