The Securities and Exchange Board of India (SEBI) has made it easier and quicker for investors to close their Systematic Investment Plans (SIPs).
Previously, canceling an SIP took up to 10 working days. However, under the new rule, this process now takes only 2 working days.
Additionally, investors can submit a closure request as late as 3 days before the SIP installment date.
This rule applies to all mutual fund companies and has been effective since December 1, 2024.
How Investors Benefit from the Change
The earlier process often led to unnecessary financial losses for investors.
For instance, if an SIP installment was due on the 15th but the investor lacked sufficient funds in their account by the 12th, they would face extra charges such as ECS return or mandate return fees.
The updated rule allows investors to cancel their SIP up to 3 days before the installment date, helping them avoid such penalties.
This flexibility can save investors from unexpected financial burdens.
Greater Financial Control for Investors
Previously, investors had to predict their account balances 10 days in advance to submit a cancellation request. This made managing finances challenging.
Now, the new 3-day rule offers more control and flexibility. Investors can assess their account balance closer to the SIP date
and make informed decisions about continuing or canceling their SIP. This change minimizes financial stress and reduces the risk of extra charges.
For example, if an SIP installment is due on the 15th and the investor realizes on the 12th that there aren’t enough funds in the account, they can now cancel the SIP without incurring any additional fees.
This new rule is a significant step towards making mutual fund investments more investor-friendly.
