Rs 250 SIP:'Unilever wife' Madhabi Puri Buch wants to test the shampoo model for SIPs

Sebi Chairperson Madhabi Puri Buch is reportedly working with fund houses and evaluating ways to make SIPs of just Rs 250 a month viable, aiming for a jump seen by FMCG companies when they brought in shampoo sachets. 

Buch, who called herself a Unilever wife, was speaking at the Rising Bharat Summit 2024. Her husband Dhaval Buch was a director at Hindustan Unilever. 

"We know the entire story about how the shampoo market in India exploded when it moved from bottles to sachets and people could afford to buy a ₹1 sachet or ₹2 sachet of shampoo, but could never have afforded to buy ₹100 bottle, the market just exploded," Buch said at Summit.

Buch stressed the MF industry should learn from sachetization of FMCG goods that made their products more affordable to wider section of the society.

Interestingly, quite a few fund houses currently offer SIP facility of as low as Rs 100 a month in various schemes though it is not an industry standard as of now. Industry players believe that the smaller SIP could act as a good entry point for many new investors and once they become comfortable with the concept of mutual fund investing, they could switch to bigger SIPs. Smaller SIPs are not really viable for a fund house from a cost perspective, they say. 

 “A SIP of Rs 250 is not viable to the AMC, in terms of costing, but could have a farfetched effect on retail investors,” says Ajaykumar Gupta, Chief Business Officer, TRUST Mutual Fund. 

“With efforts from the regulator to increase MF penetration by spreading financial literacy amongst individuals, a Rs 250 SIP could act as a good tool for giving them an experience about MF investments… It would act as a good entry point for investors at the bottom end of the income pyramid enabling them to take advantages that SIP offers,” adds Gupta. 

Gupta further believes that smaller SIPs could attract the likes of a delivery boy, rickshaw driver or street hawkers etc to the mutual fund arena and if the experience is good then they could switch to bigger SIPs and become profitable customers as well, which, in turn, could potentially increase the investor base from the current four crore unique investors to 40 crore plus investors.

Meanwhile, many in the industry believe that while smaller SIPs could indeed enhance the investor base, the capital markets regulator should look at some kind of incentive or dispensation for the fund houses to promote such small SIPs as costs related to KYC and on-boarding etc has to be done for every investor.

"Fund houses have to incur costs ranging from Rs 30 to Rs 50 for onboarding an investor as KYC and all other requirements need to be fulfilled," CEO of a leading mutual fund house told BT, adding that if a way can be worked out that incentivises such small SIPs then it would be a win-win for all stakeholders.