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The mutual fund and the bank through which the funds for the periodic investment are being provided, have to be intimated about the decision to discontinue the SIP.
A systematic investment plan (SIP) is a commitment to invest for a defined period in a selected mutual fund scheme. This decision may require a review based on additional information that becomes available regarding the performance or operation of the scheme, or a change in the investor’s personal requirement, leading to a need to discontinue the SIP. | Appointment form
The10 mistakes your financial life se forms are available with AMCs or registrar and transfer agents. One needs to fill in the folio number, bank account details, scheme name, SIP amount and the date from which the plan has to be stopped.
Procedure
The form needs to be submitted to the AMC branch or office of the R&T agent. It takes about 21 working days for the AMC to process the request cancelling the standing instruction to the bank and that for the SIP.
Post-dated cheques
If post-dated cheques have been provided to the AMC, along with the SIP instruction, the AMC returns the unused post-dated cheques to the unit holder.
Temporary stop If the SIP has to be discontinued temporarily, the investor can give a stop payment instruction to the bank or keep a low balance in the account, which will lead to the cheque or instruction being dishonoured. The SIP can be continued after this period.
Points to note -
If the account is under-funded or stop payment instructions are given for more than two months, the AMC will discontinue the SIP. - As SIP is a voluntary investment, the AMC cannot levy any charges or penalty for discontinuing the SIP midway. - If the SIP was started through an online platform, the cancellation can also be done through the same platform.
(Content courtesy: Centre for Investment Education and Learning)
