In December 2024, the Securities and Exchange Board of India (SEBI) mandated all Mutual Fund (MF) companies to reduce the processing time for cancelling their Systematic Investment Plans (SIPs) to 2 working days from the previous 10 working days.
- This new timeline for cancellation of SIPs has come into effect from December 1, 2024.
Key Changes:
i.Uniform Processing Time: As per the new norms, it is now mandatory for all Asset Management Companies (AMCs) to adhere to the two–day time frame for the cancellation of SIP, irrespective of whether SIP was registered online or offline.
ii.Online Cancellation Options: Investors can cancel their SIPs through websites of AMCs, Register and Transfer Agents (RTAs), exchanges and other channel partners.
iii.Mandatory Reason for Cancellation:Â While submitting request for cancellation of SIP, investors are required to select a reason from pre-defined list. This requirement will help AMCs to enhance their services and offerings.
iv.Regular Updates: Investors will receive regular updates about the status of their cancellation requests. This will ensure transparency as well as investors are kept informed throughout the process.
- All AMCs or RTA are further mandated to send a communication to investors after 1st failed debit attempt, informing that SIP will cancel in case of 3 consecutive rejections and another communication following the cancellation of SIP to investor.
v.Pause of SIP: The new guidelines enable the investors to pause their respective SIP in case they face temporary financial constraints. This option is available with some restrictions like: limits on duration and frequency, which differ by fund house.
- After the completion of Pause time period, the SIP automatically resumes with the next instalment.
- While, for a cancelled SIP, that SIP is required to re-register to continue.
- Also, the new rules have imposed no restrictions on the number of times a SIP can be cancelled.
Recent Related News:
On November 11 2024, SEBI has directed all Qualified Stock Brokers (QSBs) to offer either the facility of trading in the secondary market using the Unified Payment Interface (UPI)-based block mechanism to their clients similar to Application Supported by Blocked Account (ASBA) facility or the 3-in-1 trading account facility to their investors.
- This new direction for QSBs will come into effect from 1st February, 2025.
- As per the new directions, clients of the QSBs will now have the option to either continue with the current facility of trading by transferring funds to a trading member or choose for either of these facilities.
