The costs incurred by AMCs for the small SIPs are partly compensated from the Investor Education and Awareness Fund to reduce the burden on AMCs
| Photo Credit:
Chinmayi Shroff
The Association of Mutual Funds in India plans to collate details on choti SIPs (of ₹250 a month) separately from next month and make it public from January even as Registrar and Transfer Agents are modifying their system to facilitate smooth rollout of choti SIP by all the fund houses.
In a bid to widen the reach, capital market SEBI early this year lowered the minimum SIP to ₹250 a month. It is offered across schemes except for debt, high risk sectoral and thematic, small-cap and mid-cap equity schemes.
Mode restriction
Considering the high transaction cost, the mode of payment for small-ticket SIP was restricted only to the National Automated Clearing House and Unified Payment Interface auto pay mode.
RTAs have to identify the three investments of each choti SIP investors by their PAN as the transaction cost beyond that are not subsidised. While AMCs can offer additional small-ticket SIPs, discounted rates provided by intermediaries will apply only to the first three plans.
The costs incurred by AMCs for the small SIPs are partly compensated from the Investor Education and Awareness Fund to reduce the burden on AMCs.
Mutual Fund Distributors and Online Payment Portals receive a fixed incentive of ₹500 from the AMC for bringing in a new investor through choti SIP with a minimum commitment of 5 years (60 instalments). However, the incentive will be paid only after the investor completes 24 installments.
Venkat Chalasani, CEO, AMFI, said most mutual funds are waiting for their RTAs to complete the modification in their system to rollout choti SIP.
The RTA system to track choti SIP will be ready by end of this month and the data for December will be made public in January, he added.
Praveen Shankaran, Chief Operating Officer, KFin Technologies said, “we have recognised over 150 SIPs that have been flagged as choti SIP in our records since March”.
According to the existing procedure, he said RTAs will conduct preliminary validations based on certain criteria and only the eligible PANs will be sent to KRAs (Know Your Customer Registration Agency) in batch mode to obtain final confirmation from them about the first three AMCs who have consumed the KYC data from the KRAs.
The decision of tagging the Choti SIP is purely based on the information received from the KRAs, he added.
Published on November 14, 2025