SEBI's NEW rules for SIP: What you need to know before investing
Mutual fund companies must now adhere to new SEBI regulations for SIPs, effective December 1, 2024.
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The Securities and Exchange Board of India (SEBI) has implemented a new rule for mutual fund investors using SIPs.
SIP investors can now cancel their SIPs three days prior to the debit date, reduced from ten days. Mutual funds have two days to process the cancellation.
What are SEBI's new rules? SEBI has issued this circular, making these new rules mandatory for all mutual fund companies. This change regarding SIPs is effective from December 1, 2024.
Investors may benefit from SEBI's new rules. After this change, when an investor requests to cancel their SIP, the Asset Management Company (AMC) will be responsible for canceling the request within two days.
What are SEBI's rules regarding SIPs? SEBI has several rules regarding SIP cancellations that mutual fund companies follow.
If the SIP amount is not deducted, the AMC and Registrar and Transfer Agent (RTA) must inform the investor.
The investor must also be informed that if they fail to pay 3 consecutive SIPs, the SIP will be terminated.
It is also important to inform the investor after the SIP is terminated. Reason for SIP cancellation is important. It is mandatory for all AMCs to provide options for the reason for stopping the SIP. There will also be a comment option for premature closure of SIPs with reasons.
Among the options, the Association of Mutual Funds in India (AMFI) has provided some options, including Non-deposit of funds, poor scheme performance, service-related issues, desire to invest in another scheme, fund manager change, goal achievement, etc.
