NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Investor Services
Rahul, an investor, has submitted a Systematic Investment Plan (SIP) with a monthly debit of Rs 5,000 through the NACH mandate. He wishes to stop the SIP permanently. Which statement best describes the correct procedure?
An investor can stop a SIP by submitting a cancellation request to the AMC or RTA, subject to the notice period in the scheme documents. Redemption of existing units is not needed, and no minimum duration prevents cancellation. The investor retains units already allotted.
- AHe must redeem all units first, since a SIP cannot be stopped otherwise
- BHe should submit a SIP cancellation request to the AMC or RTA with the prescribed notice period, and future instalments stop after it takes effectCorrect
- CHe can stop it only after completing five years
- DOnly the distributor can cancel it, and the investor cannot
Explanation
An investor can discontinue a SIP by submitting a written cancellation request to the AMC or RTA, usually with a notice period of about 10 working days as specified in the scheme documents. Redemption is not required and no minimum tenure lock applies to stopping a SIP. Existing units remain invested.
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