Recently, market regulator SEBI has proposed a micro-SIP of Rs 250. The aim of this move is to promote systematic investment among small investors. Meanwhile, the distributor fraternity, which plays an important role in selling mutual funds to retail investors, has praised this proposal of the capital market, but has expressed the possibility of some challenges regarding the cost despite the proposed incentives for this.

Distributors believe that micro-SIPs have the potential to expand the reach of mutual funds, but there may be some initial challenges in terms of cost. Because many such small investors may also need help in the form of advice. Anil Rego of Right Horizons said, "The real test is in ensuring long-term service and support for small investors, who need more guidance during market downturns."

Initial cost may increase According to Moneycontrol, the initial cost may increase despite the proposed incentives. However, most distributors will be ready to bear these to benefit investors and increase mutual fund participation. To encourage distributors, SEBI has suggested giving an incentive of Rs 500 to educate first-time investors in mutual funds and support sustainable long-term investments. But according to SEBI, this incentive will be limited only to the first small ticket SIPs. In simple words, a maximum incentive of Rs 500 will be given per investor. Sachin Jain, managing partner of Scripbox, said that platforms with an existing user base like payment or financial apps can start micro-SIPs to cross-sell products like insurance. Discounted offer According to SEBI, industry participants have agreed to offer discounted prices to help AMCs break even on the cost of these investments within two years. Currently, AMCs have to bear costs like registrar fees and custodian fees, apart from other distribution and marketing costs and management costs. Apart from this, to promote it on a large level, a part of the cost will be given as compensation through the Investor Education and Awareness Fund.