Mutual Fund SIP Mandate Rule: What is the New Change Introduced from Oct 1?

All mutual fund Systematic Investment Plans (SIPs) will have a fixed end date, as per a new rule that came into effect on October 1, 2023, as mandated by the National Automated Clearing House (NACH).

Earlier, the NACH  had issued a circular in this regard on August 18, 2023. The NACH is a centralised electronic payments system operated by the National Payments Corporation of India (NPCI) that facilitates high-volume and low-value interbank transactions. In addition,  mutual fund houses also use it to collect SIP payments from investors’ bank accounts. 

Typically, perpetual SIPs are SIPs that do not have a fixed end date. They are often used by long-term investors looking forward to building wealth over time.

Effective from October 1, 2023,  SIPs can be authorised for up to 30 years from the date of issuance. The centralised system NACH will exclusively accept mandates with a timeframe of 30 years or less.

The option ‘until cancelled’ will no longer be in use for all categories of mandates. This has been replaced by a final collection date (end-date), which cannot be more than 30 years from the date of issue of the mandate.

In the case of pre-October 1 SIPs, these will remain unaffected, as the rule is applicable only from the date mentioned above.

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