Context: The Securities and Exchange Board of India (Sebi) has unveiled a proposal for promoting financial inclusion through the "sachetisation" of mutual fund (MFs) investments. SEBI is working with the mutual fund industry to make such products available.
Relevance of the Topic: Prelims: Key facts about Sachetisation.
What is Sachetisation?
- Sachetisation refers to the process of offering financial products and services in smaller, more affordable packages, making them easier to access and manage.
- India’s capital market regulator Securities and Exchange Board of India (SEBI) wants to “sachetise” mutual fund investments made through monthly systematic investment plans (SIPs).
- Objective:
- To promote financial inclusion.
- Better participation in mutual funds among lower-income investors.
- Financial empowerment of the underserved section of the economy.
- Nudge fund houses to expand their footprints to even remote locations.
SEBI’s Proposal for Sachetisation
- SEBI’s proposal envisages launching a sachetised mutual fund product—a small ticket SIP of Rs. 250.
- Eligibility Criteria:
- Available for new investors only.
- Investors can start with a maximum of 3 small-ticket SIPs across different Asset Management Companies (AMCs).
- This will be supported by discounted fees and incentives from intermediaries.
- Payment mode: Payments will be facilitated via (restricted to) auto-pay modes like NACH (National Automated Clearing House) and UPI (Unified Payment Interface).
- Subsidy: Costs incurred by AMCs will be subsidised through SEBI’s Investor Education and Awareness Fund.
- Incentive: An incentive of Rs. 500 will be offered to distributors and platforms for each new investor completing 24 SIP installments, promoting outreach efforts.
- Schemes Excluded: Debt schemes, sectoral, thematic, small-cap, and mid-cap equity funds due to their volatility.
- Commitment Period: Investors are encouraged to commit to 5 years (60 instalments), but premature withdrawal is allowed.