Going ahead, do you see the SIP flows into mutual funds growing further or do you see SIPs stagnating at these levels?

Broadly, there is a risk that the overall SIP flows on a monthly basis may stagnate. Here is what you need to know.

a) Mutual fund systematic investment plans (SIPs) have grown exponentially in the last few years. From SIP flows of about Rs4,000 crore some 5 years back, the monthly SIP flows have grown to a consistent level of more than Rs12,000 per month.

b) The growth till date has been largely macro. There are more than 10 crore trading accounts, 13.5 crore MF folios and over 8 crore demat accounts in India. SIP folios have grown to 5.5 crore. All this has been largely driven by the increased participation of millennials, but that gradually appears to be saturating.

c) One concern is that the markets have been extremely volatile in last 8 months. As a result, not only have fresh SIPs been tapering, even the SIP closure ratio has been on the rise. SIP flows, in the aftermath of such frenetic growth, can easily get caught in stagnation mode of growth, which remains a key risk.

d) One way is to think out of the box and put more focus on how to expand the SIP market laterally. Sample this. There are 5.5 crore SIP folios in India as against 30 crore policies, 65 crore bank accounts and 110 crore mobile phone connections. Future SIPs would depend on how the cross selling is done.

e) Also, it is about smart use of technology. Today, technology is being leveraged to reach out and execute transactions. Going ahead, the key is to use technology to inform, advise and empower in an effective manner. That can prevent SIP stagnation.