The newest sachet won’t be a shampoo —it is an SIP

Imagine a small-town tailor, Meena, who saves a little from her earnings each month to secure her family’s future. Until now, her options were limited to informal saving groups or a small fixed deposit at the local bank. The idea of investing in mutual funds, with all its complexities and perceived risks, seemed far removed from her reality. But now, thanks to Securities and Exchange Board of India (SEBI)’s bold new proposal, Meena’s story could soon take a transformative turn.

On January 22, the SEBI introduced a groundbreaking consultation paper that could bring mutual fund investments to the doorsteps of millions like Meena. The idea? ‘Sachetisation’ of mutual funds through micro-SIPs as low as ₹250 per month. For Meena and countless others, this could open the door to disciplined, long-term wealth creation that was once considered the preserve of wealthier urban investors. It’s a vision that echoes the transformative journey of UPI, which made digital payments an everyday reality for all.

The brilliance of this initiative lies in its simplicity. A ₹250 SIP may seem small, but it is a powerful step toward financial inclusion. By reducing the entry barrier, SEBI is making mutual funds accessible to a vast segment of the population that has traditionally been excluded. For first-time investors, the process has been designed to be hassle-free. No PAN card is required for investments up to ₹50,000 annually, payments can be made through UPI auto-pay or NACH, and key costs like KYC are covered by the Investor Education and Awareness Fund. This careful attention to detail ensures that even those new to the world of investments feel encouraged and empowered to begin their journey.

But what if SEBI pushed this innovation even further? While ₹250 is undoubtedly a reasonable and inclusive threshold, reducing the micro-SIP amount to ₹100 could have an even greater impact. For many potential investors, particularly those from lower-income backgrounds, ₹250 still represents a significant financial commitment. ₹100, on the other hand, is a psychologically smaller barrier to breach — more akin to spending on a cup of tea with snacks or a prepaid mobile recharge. By lowering the threshold, SEBI could tap into an even broader base of savers, allowing the smallest contributors to see themselves as part of India’s growth story. It could create a culture of investing where even the tiniest surplus is channelled into systematic wealth creation.

SEBI’s proposal doesn’t stop at accessibility. It has also ensured that the ecosystem supporting these micro-SIPs is robust and incentivised to succeed. Distributors and platforms bringing in new investors will receive ₹500 as compensation for onboarding first-timers who stick to their SIPs for at least two years. With subsidised costs and thoughtful structuring, SEBI expects mutual fund companies to break even on these small-ticket SIPs within two years, making it a win-win proposition for all stakeholders.

What makes this story even more compelling is its potential for scale. If this experiment succeeds, the ₹250 SIP — or ideally, a ₹100 SIP — could pave the way for further innovations, truly democratising financial markets. It could become as routine as a monthly mobile recharge, transforming how individuals across India think about savings and investments.

Yet, as with any ambitious idea, there is an underlying responsibility. The mutual fund industry must now rise to the occasion. Asset management companies (AMCs) will need to double down on their risk management frameworks to protect the trust of first-time investors. Many of these new participants will come from modest financial backgrounds, staking their hard-earned savings on this promise of growth. Transparent communication in multiple Indian languages, strong investor education initiatives, and prudent fund management will be critical to ensuring that this trust is not misplaced. SEBI’s consultation paper also ensures that only growth-oriented funds are eligible for these SIPs, shielding investors from the higher risks associated with thematic or volatile funds.

In many ways, this initiative could become bigger than UPI in terms of impact. While UPI revolutionised how India transacts, SEBI’s micro-SIP proposal has the potential to revolutionise how India saves. By nurturing a habit of disciplined investing, it could empower millions to achieve their financial goals and bring stability to household finances across India. A ₹100 or ₹250 SIP may appear small in isolation, but collectively, it could lay the foundation for a financially empowered India, one micro-investment at a time. It is a dream worth chasing — for Meena, for her family, and for the millions like her across the country.

(Srinath Sridharan is a corporate advisor and independent director on corporate boards. X: @ssmumbai.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.