Mutual Fund SIP: A perpetual SIP is a SIP that does not have a fixed end date.
Mutual Fund SIP Mandate: National Automated Clearing House (NACH) has mandated that all Systematic Investment Plan (SIP) mandates must have a fixed end date, with a maximum duration of 30 years from the date of issuance.
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NACH is a centralised electronic payment system in India that facilitates high-volume, low-value interbank transactions. It is operated by the National Payments Corporation of India (NPCI).
Earlier, perpetual SIP had no end date. This will be effective from October 1, 2023. This is as per a circular issued by the NACH on August 18, 2023.
NACH is used by mutual fund houses to collect SIP payments from investors’ bank accounts. Investors can register for a NACH mandate with their mutual fund house. Once the mandate is registered, the mutual fund house will automatically debit the investor’s bank account for the SIP amount at the regular interval (e.g., monthly, quarterly, or annually).
What Is A Perpetual SIP?
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A perpetual SIP is a SIP that does not have a fixed end date. It means that the SIP will continue to invest a fixed amount of money at regular intervals until you choose to cancel it. Perpetual SIPs are typically used by long-term investors who want to build wealth over time.
Will Your Existing SIPs Get Impacted?
Investors need to be aware that Perpetual SIPs established or initiated prior to September 30, 2023, will remain unaffected. The stipulations outlined in the circular will only apply to SIPs that are initiated after the circular takes effect on October 1, 2023. The NACH circular explicitly states that these requirements are applicable to all forms of mandates, whether physical or electronic.
What’s Changed From October 1?
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Maximum period for mandate
A mandate can be authorised for a duration of up to 30 years starting from the date of issuance. The central system will incorporate validation measures to exclusively accept mandates with durations of 30 years or less.
