SEBI’s recent move to introduce small-ticket systematic investment plans (SIPs) with a minimum monthly investment of just Rs 250 is a big swing aimed at boosting financial inclusion by making mutual funds accessible to lower- and middle-income (LMI) groups. SIP inflows are up, from Rs 17,610 crore in December 2023 to Rs 25,320 crore in November 2024 and there’s a real interest in market-linked investments. But let’s be real: Just dropping the entry fee won’t guarantee inclusion. For this, we would need to tackle the underlying issues that could stop this plan from truly helping those it’s meant for.Story continues below this adImagine this: For many people in LMI segments, traditional savings channels just aren’t cutting it anymore. With inflation eating away at returns from bank deposits, the need for better options is pressing. Banks haven’t exactly been rushing to attract these potential investors. They often overlook the strategic efforts needed to engage this segment. So, how can a small-ticket SIP really make a difference in their lives?Let’s picture a working-class woman juggling her job and family expenses. For her, setting aside even a small amount can feel daunting. Now, what if she could put away Rs 250 each month? It might sound like peanuts, but over time, it can grow into something significant. SIPs are all about building that saving habit — a habit that can be life-changing for folks who’ve always been left out of the wealth-building party.But here’s the thing: Research by the National Centre for Financial Education (NCFE) back in 2019 showed that just 3 per cent of Indian adults invest in stocks, and that number dips to 2 per cent in rural areas. If new investors don’t really get mutual funds, they might pull out their money early, leading to frustration. SEBI needs to make investor education a priority, so people get the risks, the returns, and the long-term nature of these investments.Story continues below this adAnd while small-ticket SIPs might sound like a way to bring in millions of fresh investors, the truth is more complex. Processing these tiny investments on a massive scale isn’t cheap. Even with UPI, transaction costs for low-value payments can climb as high as 80 paise to Rs 1. Given how little revenue these small-ticket investments generate, Asset Management Companies (AMCs) might not be too thrilled to promote them aggressively.Let’s look at some success stories from around the globe. In the US, platforms like Acorns have revolutionised how people think about investing by allowing users to invest as little as $5 or $10 at a time. This model has led to nearly 54 per cent of Americans owning mutual funds as part of their portfolio by making investing feel accessible and manageable — even for those on tight budgets. Similarly, Kenya’s M-Akiba initiative offers government bonds through mobile phones, making it easy for everyday citizens to invest small amounts regularly. Imagine if Indian students started learning about investing early on through similar schemes — it could change everything in the long run.To truly unlock the potential of small-ticket SIPs, a multi-pronged strategy is paramount.Build investor awareness: SEBI must forge strong alliances with schools, fintech platforms, and NGOs to spearhead comprehensive financial literacy campaigns. These campaigns should demystify investing, highlight the inherent risks, and stress the importance of long-term financial planning.Incentivise AMCs: To entice AMCs to develop low-cost, diversified SIP products that cater to the unique needs of LMI investors, SEBI could offer enticing tax incentives or other forms of regulatory support. Lowering transaction costs through strategic subsidies or digital infrastructure investments would also be a game-changer.Improve digital access: SEBI must streamline UPI payments and simplify those often-confounding KYC regulations to make investing more accessible, particularly in underserved rural areas. The integration of AI-powered chatbots and virtual assistants can also provide invaluable guidance for first-time investors navigating the often-complex investment landscape.Prioritise investor protection: Establishing a data-driven system to meticulously monitor adoption trends, investor retention rates, and overall investor behavior is crucial. Introducing safety nets like capital protection funds or micro-insurance products can also shield LMI investors from potentially devastating risks.most readLink with government schemes: Seamlessly integrating small-ticket SIPs with established government programs like PMJDY or EPFO would build trust and foster greater participation. This synergistic approach could pave the way for long-term financial security for millions of Indians.While SEBI’s initiative is undoubtedly a step in the right direction, its ultimate success hinges on proactively tackling these multifaceted challenges. A robust policy framework, informed by global best practices, will be the linchpin in transforming this initiative from a well-intentioned idea into a genuine catalyst for economic empowerment. Without these essential reforms and interventions, small-ticket SIPs might end up being a missed opportunity to truly democratise finance in India.Mishra is Senior Manager and Tiwari is Partner, MSC (MicroSave Consulting)