SIP Charges: If a SIP installment fails due to a low balance in your bank account, it can result in significant losses. Find out what the penalty is for a failed SIP installment.

What happens if your SIP bounces?

SIP Charges: If you invest in a SIP (Systematic Investment Plan), you should be aware of the associated charges. Lack of proper information can lead to significant losses. Many people focus solely on investing, but small charges can diminish their wealth. One such charge is the penalty for failed SIP instalments.

What happens if the installment fails?

If your bank account doesn't have a sufficient balance and your SIP installment isn't deducted, the bank can impose a penalty of ₹250 to ₹750 per transaction. Furthermore, 18% GST is also added. This can result in significant monthly losses, especially if you have multiple SIPs running simultaneously.

How can there be a loss of up to ₹2950?

According to mutual fund experts, if multiple SIP installments fail in a single day, the penalty increases exponentially. For example, if you're charged approximately ₹500 per transaction and five SIPs fail, you'll incur a penalty of ₹2,500. When GST is added, the total loss could reach approximately ₹2,950.

Why is this a serious matter?

Many investors overlook the fact that this charge applies to every transaction, not every day. Therefore, if you have multiple SIPs set up on the same date, the losses can be significant.

How does the system work?

SIPs in India are typically conducted through the NACH system operated by the National Payments Corporation of India. This system allows asset management companies to automatically debit funds from your bank account on specified dates.