Pausing your SIPs
Basic steps on how to stop or pause SIP investments
As you begin your investment journey, taking the SIP (systematic investment plan) route to buy mutual funds is a popular route. You commit a certain sum based on your goals and risk appetite. But what if you fall short of the saving target?
A job loss, wage cut, sudden cash outflow due to medical or any other emergency or some such reason could mean that you would need to hold in your monthly SIP commitments. You can hit the pause button or stop SIPs. But doing so involves some steps. Here’s more on how you can stop or pause your SIPs.
How does it work?
Nearly all mutual fund houses provide their investors with SIP Pause Facility. The maximum time period for which one can pause SIPs varies. For instance, ICICI Prudential, ABSL and Parag Parikh (PPFAS) allow pausing SIPs for up to three months. In the case of Kotak MF and Nippon India MF, it is six months, while SBI MF allows it for even a year. Further, fund houses such as Nippon India and Axis allow pauses twice during the SIP tenure, while Kotak and SBI investors can pause their SIPs anytime during the tenure.
In order to avail the facility, investors need to notify the fund house beforehand. Kotak and SBI investors need to notify the fund houses 15 days prior to the next SIP instalment. For ABSL, Axis and Nippon, the same is 10 days, while ICICI Pru and PPFAS investors should notify the fund house at least 30 days beforehand.
Do note that certain fund houses such as Axis MF and Nippon India MF let investors avail the facility only after completion of six SIP instalments. Majority of fund houses allow the facility for monthly SIPs only while investors of certain fund houses such as Kotak and PPFAS can avail it for quarterly SIPs too. SBI is one of the few
WAIT AND WATCH
Based on your cashflows, job prospects and surplus, you can keep your systematic investments on hold
fund houses which allows its investors to pause SIPs across all frequencies.
Another aspect is on step-up SIPs. Let’s say, the investment amount prior to pausing SIP it is ₹5,000 and step-up amount is ₹1,000. If the pause period is completed after the date of step-up, then the SIP instalment amount post completion of pause period shall be ₹6,000.
Some mutual funds provide the SIP Pause facility only for those who have paid at least six SIP instalments.
THE PROCESS
One can avail Pause SIP facility either through online or o¯ine mode. You can pause the SIP online by visiting CAMS or Kfintech websites. You can also visit the respective fund houses to avail the facility, wherein information such as PAN number, folio number and bank account number are required.
Further, one can also avail the facility by filing the SIP Pause form at the branch of the respective fund house or CAMS. However, do note that this facility and the process is applicable only for AMC-initiated debit feeds such as ECS (electronic clearing system), NACH (National Automated Clearing House of the National Payments Corporation of India) or direct debit. It is not applicable for SIPs registered through other means such as Mutual Fund Utility, stock exchange platforms and in certain cases when standing instructions have been given to the bank where SIPs are registered directly with them and not with the fund house.
In case SIP is made through standing instructions, one need to provide ‘stop payment’ instruction to the bank wherein if the instruction stays for more than two months, the SIP gets automatically cancelled. If you have initiated your SIP through MF Utility, you can use its Stop SIP and Start (SIPSaS) feature to pause the SIP. Remember that the pause request should be placed with the same entity through which the original SIP was registered.
If you make investments via an online aggregator portal (as distributor or direct mode), the entity will mostly allow the pausing facility without diªculty.