Whenever you start investing in any mutual fund, it is necessary to maintain regularity in it. It becomes more important to maintain discipline when you have opted for a SIP. A Systematic Investment Plan also referred to as SIP, is a tool provided by mutual funds to help investors make disciplined investments. The SIP option enables an investor to make fixed investments in the mutual fund scheme of their choice at predetermined intervals. One of the many questions that may come to mind while investing in SIPs is, what happens if you miss an instalment? Allow us to explain.
It is crucial to note that one can pay SIP instalments on a monthly, quarterly or half-yearly basis. Most people nowadays opt for the auto-debit option so that the payment is debited automatically without having to ponder over it. However, if there are insufficient funds in the linked bank account or you miss the payment, you may face some problems.
According to experts, it has no impact on your investment if you miss one or two SIP instalments. But the fund firm has the right to terminate your SIP plan if you miss three consecutive payments. ECS regulations provide that a debit request must be sent to the fund house at least three months in advance.
Customers of all fund companies are not subject to penalties for missing SIP instalment payments; nevertheless, if you invested in a bank’s SIP plan, you may be subject to fines and penalties. The fine varies in terms of amount from bank to bank. For instance, ICICI Bank imposes a Rs 350 fine for failing to make a monthly SIP instalment.
If there are insufficient funds in your bank to make the payment and the date is fast approaching, then you stall the payment for some time with timely notice.
You can file an online request for this or visit the relevant office. However, to do this, action must be taken before the SIP instalment due date. Because it can take 10 to 30 days to complete this process. Not all fund firms, however, provide this service.