There are many ways to invest in the stock market. One of the most popular ways is to invest in mutual funds. You can become rich by investing in the right mutual fund. Systematic Investment Plan (SIP) of Mutual Fund is considered better for long-term investment.
SIP is an investment plan in which you invest a fixed amount at regular intervals, like SIP, it becomes more important for you to maintain discipline in it. The question may arise in your mind that if you miss paying SIP installment, how much penalty will you have to pay and what will be the impact on your funds?
Usually in SIP you get the option of auto debit. In such a situation, if there is no money in the bank account linked to your SIP, then you may face many problems. If you forget to pay the SIP installment, then you may have to pay a penalty.
Banks impose penalty on auto debit transaction failure
Despite the facility of auto debit of SIP, sometimes auto debit does not work due to insufficient balance in the bank account. Generally, mutual fund companies do not impose any charge on missed SIP installment. Banks can impose a penalty ranging from Rs 100 to Rs 750 on failed auto debit transaction. Different banks impose different penalties. This charge is levied if sufficient balance is not maintained in your bank account for auto-debit mandate through Electronic Clearing Service (ECS) or National Automated Clearing House (NACH). Apart from this, as per SEBI regulations, mutual fund companies can cancel your SIP if you miss SIP installment for 3 consecutive months.
SIP can be paused for some time.
You can either pay a penalty or ask the mutual fund company to ‘pause’ the plan. This will cause your policy to be closed for some time. When the money comes, you can remove it and start investing again.
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