India’s capital market regulator, the Securities and Exchange Board of India (SEBI), recently unveiled a landmark consultation paper proposing the “sachetisation” of mutual fund investments. This has been done with the intent of making investments more inclusive by offering products and services in more snackable, smaller, and affordable packages, so they become more accessible across various strata of the Indian society.

What is Sachetisation of Mutual Funds?

Sachetisation essentially refers to offering of the mutual fund product in more compact sizes starting at as low as INR 250. This will encourage more low-income groups to begin investing, as for large swaths of the Indian population, SIPs have conventionally been an elusive, inaccessible conundrum.

In the proposal, SEBI says, Sachetisation of mutual funds will enable small-ticket investment in mutual funds gradually on a periodic basis. This can assist in the financial empowerment of the under-served section of the economy and nudge fund houses to expand their footprints to even remote locations in the country.

This concept aligns perfectly with India’s evolving financial ecosystem, where small-ticket investments are becoming the norm, thanks to digital payment platforms and micro-lending initiatives.

Benefits of Sachetisation

• Inclusive Investment Opportunities

By lowering the investment threshold, SEBI aims to bring underserved communities like daily wage earners, labourers, and rural households into the mutual fund fold. This step will foster a more inclusive investment environment and may help people start investing in their own futures.

• Promotes Financial Literacy

Small investments provide an entry point for individuals to understand and experience the benefits of mutual fund investing without significant financial risk. This will hopefully spur them on to educate themselves and further sharpen their investment plans.

• Encourages a Savings Habit

The sachetised approach makes it easier for individuals to integrate investments into their monthly budgets, fostering a culture of disciplined saving.

SEBI’s grand proposal can be seen as a visionary step towards democratising investments in India. If implemented flawlessly, it will open doors to investment opportunities for a whole new cohort of Indian citizens.

SEBI has sought public comments on the proposals till February 6.

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