You will not have to wait long to close SIP. It used to take 10 days but now it will be done in two working days. Market regulator SEBI has made a lot of changes in this. The new rule has come into effect from December 1, 2024.
SIP Close: Now you will not have to wait long to stop SIP in mutual funds. SEBI has made a lot of changes in this. Earlier it used to take ten working days to cancel SIP. But now your SIP will be cancelled in just two working days (T+2). SEBI has made this new rule mandatory for all mutual fund companies. The new rule has come into effect from December 1, 2024.
What has changed?
SEBI has reduced the time limit for cancelling SIP to two working days (T+2). This rule applies to both online and offline SIPs. Abhijeet Talukdar, founder of Attainix Consulting, says that this step by SEBI is very good. Usually people cancel the SIP installment close to its due date due to some financial problem or any other reason. If the SIP is triggered and there is not enough money in the account, then the customer had to pay ECS return or mandate return charges. Now this problem is almost solved.
What was the problem?
Earlier there was a rule to apply 10 days in advance to cancel SIP. It was difficult to estimate the status of your bank account so many days in advance. In such a situation, most people had to pay a penalty in case the installment bounced.
What does the fund house have to do?
All AMCs/RTAs will have to send a message to the investor when the SIP fails for the first time. It will be told that if the debit fails 3 times in a row, the SIP will be stopped. After the SIP is cancelled, the investor will have to be informed about it by sending another message. Apart from this, the fund house will have to ensure that along with registering the SIP, investors are also given the option to cancel the active SIP.
Possible reasons for cancellation of SIP?
All AMCs are also required to ensure that the facility to cancel SIP is available on the website of the AMC and the website of their respective RTA, irrespective of where such SIP was registered. All AMCs are required to provide an option to comment during premature cancellation of SIP. Reasons include lack of funds, scheme not performing well, service related issues, change in load, want to invest in another scheme, change in fund manager, target achieved and other reasons.
