Will the clean-up and competitive pressures keep SIP flows in check?

In April 2025, the mutual fund industry hit an intriguing paradox. The Association of Mutual Funds in India (AMFI) reported a record ₹26,632 crore in monthly SIP (Systematic Investment Plan) inflows—its highest ever. Yet, in the same month, the SIP stoppage ratio soared to a staggering 296%, with nearly 1.36 crore accounts discontinued or matured versus 46 lakh fresh accounts opened.

While the spike in the stoppage ratio raised some eyebrows, industry insiders say it’s largely the result of a reconciliation drive by AMFI, reportedly on the back of the Securities and Exchange Board of India (SEBI) issuing a circular stating that SIPs with more than three consecutive failed instalment- payment attempts were to be accounted as invalid. Registrars and Transfer Agents (RTAs) have been actively purging inactive, dormant, or duplicate SIP accounts that no longer contribute, effectively cleaning up the industry’s books.

Currently, the total outstanding SIP accounts stand at 9.14 crore, after 5.14 crore SIPs were discontinued in FY25. However, the number of new SIPs registered during the year was 6.80 crore.

Still, the numbers tell only part of the story. According to Radhika Gupta, MD and CEO of Edelweiss Mutual Fund, competitive pressures are also at play. “There are definitely players who would like to see the SIP book shrink,” she tells Fortune India. “₹26,000 crore a month is not small money—that’s a $3 billion monthly flow. It’s obvious why some would want a piece of that.” Gupta points to portfolio management services (PMS) and even banks as entities looking to redirect investor flows away from mutual funds.

The start of 2025 hasn’t helped either. Market sentiment was weighed down by macro uncertainties—India’s evolving fiscal priorities and policy ambiguity from the U.S., particularly around former President Donald Trump’s tariff stance, contributed to subdued earnings visibility and delayed corporate decisions.

That mood, however, is beginning to shift. “India’s budgetary path is clearer now, and the U.S. policy direction is better understood,” says Trideep Bhattacharya, President and CIO of Equities at Edelweiss Mutual Fund. “While earnings haven’t yet picked up meaningfully, the macro setup is certainly more stable.”

Bhattacharya points out that Indian equities have already rallied 13–14% this year, while U.S. indices have delivered returns of 18–22%. Edelweiss MF’s equity team maintained low cash positions throughout the volatile stretch—a sign of their conviction that a macro turnaround was on the cards.

Looking ahead, Bhattacharya believes the second half of FY26 will offer a more constructive environment, aided by falling oil prices, steady consumer demand, and policy clarity on both domestic and global fronts.

As for SIP flows, will the growth streak continue? Gupta remains optimistic but measured. While she expects robust investor participation to sustain, she tempers expectations. “The pace of growth may moderate compared to last year,” she notes.