The spike in the ratio can be attributed to rejection of several systematic investment plans or SIP accounts due to the new SIP account closure criteria. As per the SEBI circular, if an investor misses payment of SIP instalments for three consecutive months, the SIP will be terminated. Previously, AMCs had their discretion to decide when to terminate the SIP in such cases. Other reasons for the rise in suspension rate include digital platforms not aggressively promoting new accounts ahead of the elections and low number of new fund launches (NFOs) during the month.
In May 2024, the number of expired or discontinued SIP accounts surged to a record high of 4.396 million, while new SIP registrations stood at 4.974 million, pushing net SIP account registrations to 578,000, the lowest in the past 42 months. Net SIP registrations over the past six months averaged 2.334 million per month.
Despite the higher rate of stoppages, the total value of SIP accounts continued to grow month-on-month, reaching Rs 20,904 crore at the end of May 2024. The average ticket size of SIP accounts rose to Rs 2,386 crore in May 2024, its highest in 39 months. This indicates that the quality of SIPs is improving as non-contributing SIP accounts are gradually being removed from the total number of SIP accounts.
