It is a very sad situation when the SIP investment must be closed due to the sudden death of the sole earner of the family. We have seen such a situation during the time of the Coronavirus COVID-19 pandemic.
There may be a need to stop SIP in between due to several reasons –
- Families who lose the first holder of their investment and cannot afford to continue due to financial liquidity crunch.
- Many people have lost their jobs and they have no other source of income.
- The employment of many people has also been affected due to the Pandemic. This reduction in income has also affected the investment ability of those families.
- Sometimes, due to a market crash, people want to stop investing and wait for the market to resume to the level to start reinvesting.
- The schemes, people have invested in are not working properly.
In such situations, they can decide to stop SIP investment. Mutual Fund is a user friendly industry and there are provisions for every requirement of the investors. Following are the steps to understand the procedure to stop the SIP investments.
How can you stop the SIP investment?
SIP stopping procedure can be done both through online and offline mode.
How can you stop the SIP investment Online?
If you want to cancel the SIP online, primarily you need to inform the mutual fund house as well as your bank to stop the ECS for the SIP. Login your details such as folio number, bank account number linked with folio and your PAN on website of the mutual fund you want to cancel SIP. Now click on “Cancel SIP” tab.
If the investment was through an agent or a distributor platform, the investor can make a request with them and cancel SIP through mutual fund portal account of the distributor.
How can you stop the SIP investment Offline?
Offline cancellation process of SIP can be initiated by requesting the distributor to do so on your behalf. It can be done on your own by informing the AMC. You have to get the specified Form from AMC or RTA (Registrar & transfer agents) of mutual funds. Submit the duly filled form to the AMC branch or RTA office with all the details like pan, SIP Amount, folio, scheme name and date from which the SIP has to be stopped.
How long does it take for SIP to be cancelled?
It takes around 2 to 4 weeks for the SIP to be cancelled.
Is there any charges for SIP cancellation?
SIP is a voluntary investment and AMC does not impose any fine or additional charges if you stop your SIP in the middle of the scheme period or even before the Lock in Period. Some AMCs may charge an Exit load when you discontinue permanently and redeem the investment made in the SIP.
Your Bank making the periodical payments as per the standing instruction in this regard may levy some penalty charge if any auto payment is missed.
What is the Pause or temporary stop of SIP Vs cancellation of SIP?
Many investors may be having financial problems due to pandemic we all are facing. They may not have sufficient funds to continue their SIP investments. In such a situation they may plan to stop their SIP investments. Pause facility of SIP investment offered by many mutual funds can be a good option for such investors.
The pause facility allows investors to bring their SIP installments to a standstill for a certain period of time and resume them after the pause-period without having penalty.
If an SIP installment is missed, then banks impose bouncing charges on the customers. If it is continued for few months, the SIP automatically gets stopped.
So it is always better for many investors to use the pause facility if available and try to make their financial status strengthen during this interval period.
Can we stop SIP anytime?
SIP is a voluntary investment and can be stopped any time. We have to inform to the concerned mutual fund and your bank in writing before stopping your SIP.
How can we continue to earn even after discontinuing SIP?
It is important to note that if the accumulated amount is not redeemed after stopping the SIP, the accumulated existing investment will remain invested in the scheme. Stopping an SIP does not mean withdrawal from the scheme until the investor makes redemption or switch request.
The money remained in the fund scheme keeps on earning returns in tune of the fund performance. The NAV of the date of redemption or switch will be applicable on such investments, whenever redeemed. So even after we stop our SIP, our existing investment will continue to earn returns.
Example of a practical Situation
Let us discuss a practical situation in which wife of a deceased husband wants to stop the SIP investment initiated by her husband in his life time-
Last year, my husband started making investment in mutual fund through SIP (Systematic Investment Plan) mode. I am the second holder of the investment. My husband passed away recently. Under this SIP (Systematic Investment Plan), a sum of Rs. 5000/- was being invested every month in a mutual fund scheme from my husband’s bank account. I do not want to continue the SIP. How can I stop the SIP?
For online Cancellation – You need to have Folio number of your mutual fund SIP, bank account number associated with the folio and PAN. With these details, you can login into the concerned mutual fund website. Thereafter, you have to select the ongoing SIP for which you wish to cancel SIP and click on “Cancel SIP” (to know web site link of mutual fund click here)
For Offline cancellation – For canceling SIP, You can request your mutual fund to initiate the process of cancelling the SIP. For this you need to submit the duly filled in prescribed form to the office of mutual fund or concerned RTA. Please click here for downloading the relevant form.