How to Stop Your SIP when Your Distributor Refuses to Stop SIP?

How to Stop Your SIP when Your Distributor Refuses to Stop SIP?

There are times when you need to stop your SIP. Maybe this month the cash flows are not working out and you will start again in 3 to 4 months. Maybe your fund is underperforming and you want to move to a different fund. Or maybe you want to move to a different platform, so you want to stop your SIP with the current platform.

In any case, it’s handy to know how to get out of a commitment, before you enter into that relationship. It’s important to not be at the mercy of your broker or distributor or Mutual Fund investment platform.

Case 1: Not a Real SIP:

It’s possible your SIP with your distribution platform is a simulated SIP. That is, the SIP is not registered with the AMC, but the distribution platform places a fresh lumpsum order every month on the same date to simulate the SIP.

It is easy to verify a simulated SIP –

  • Simulated SIPs have higher minimums than registered SIPs. This is because lumpsum have higher minimums than SIPs
  • Simulated SIPs show as an additional purchase on your Consolidated Account Statement generated from CAMs or Karvy instead of systematic purchase or SIP

The biggest drawback of simulated SIPs is that when AMC stops taking new lumpsum in a scheme they stop automatically while real SIPs continue.

To stop a simulated SIP you just need to reach out to your bank customer support and ask them to delete mandates, if any. Most banks have a grievance escalation desk, so you can always escalate the request based on how urgent it is.

Case 2: Real SIP with Bank Mandate

Unfortunately, this is usually the most common case. Distributors would say a minimum number of SIP instalments need to be made. In reality, however, you can always stop your SIP, with no penalty or cost.

Your first step would be to ask your bank to delete the existing mandate if auto-debit is set up in your net banking. Most people think deleting the biller is enough – but deleting the biller often doesn’t stop the bill payment that has already been enqueued.

In case of e-NACH mandate, there’s no option for deleting the biller yourself.

Some net banking services let you stop the bill payment, but in general, always get it in writing from your bank’s customer support team that the mandate has been deleted and bill pay has been stopped.

Meanwhile, you can get a SIP cancellation form filled out, and submit to nearest CAMS or Karvy offices. This would require some legwork. Then, there’s customer support for each AMC, and dedicated customer support channel maintained by RTAs for respective AMCs. You can ask them in writing; with your SIP amount, folio, and an attested copy of your PAN; to stop your SIP immediately.

Finally, if none of the above seems responsive, as an investor you have the right to reach out to SEBI and file a complaint through the SEBI SCORES portal. Forwarding complaint ID received from SEBI to your AMC and distributor, usually help in moving thing along.

SIPs are not home loan EMIs. It’s your money, getting invested. You’re not on the hook for it. The commitment is yours, and only to yourself. You have many avenues available to you, to be able to stop the SIP, at no cost or penalty to you. Be aware of your rights as an investor, and exercise them judiciously.

This article was initially published by CNBCTV18 in the Personal Finance section.

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