Smaller systematic investment plans (SIPs) in mutual funds can increase financial inclusion and build the groundwork for future growth and resilience in Indian stock markets, according to Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch. Buch said at a Business Today event that the capital markets regulator was working with mutual fund houses to make Rs 250 SIP sustainable for the industry.

"We are working with them to determine where that cost is and what SEBI can do to assist in bringing that viability down to Rs 250 per month." It would then be comparable to what Hindustan Unilever did with shampoo sashes. It will increase financial inclusion while also strengthening our markets, according to the SEBI chairperson.

SIP is based on the premise of regular investing. It's similar to your recurring deposit, where you put a modest amount in every month. It enables you to invest in a mutual fund by paying smaller periodic payments (monthly or quarterly) rather than a large one-time payment. Buch's statement comes as the Indian mutual fund industry's total assets under management approaches the Rs 50 trillion level.

The mutual fund sector's assets under management (AUM) hit Rs 49.04 trillion in November, according to figures issued on December 8 by the Association of Mutual Funds of India (AMFI), the industry trade group for mutual funds. This was aided by benchmark indices reaching new highs during the month.

To be true, some mutual fund institutions already provide SIPs as little as Rs 100, but alternatives are restricted because giving SIPs at that level may not be financially sustainable for them. Buch used the example of local investors shielding markets from foreign shocks over the last year or so to explain how smaller SIPs can provide more resilience to Indian equities markets.

"India, unlike other emerging markets, was resilient." This was due to retail money entering the market to fill the void, both through direct investments by retail investors and through mutual funds. People who left India began underperforming their benchmark index, and many quickly returned because they couldn't afford to miss out on the Indian return. As a result, the benefit of our domestic flows and retail flows had a twofold impact. "The impact of domestic money coming in, as well as the impact of foreign money returning," Buch explained.

According to the regulator, she intends to work on making Rs 250 SIPs realistic, as opposed to the present Rs 500. "I think that would lay the foundation for the next many years for future growth and further resilience of the market," Buch went on to say.

Meanwhile, SEBI is considering creating a new asset class to appeal to high-risk investors.

Retail investors seeking unsolicited advice have alarmed the market regulator. They frequently turn to unregistered advisers that provide illegal or pseudo Portfolio Management Services (PMS) in the guise of investing advice, resulting in their money being invested in risky investments or methods.