There is no penalty for withdrawing from a fund in which one is investing through SIP mode, as SIP and withdrawal (redemption) are two separate mandates.
You can withdraw funds from SIP anytime but exit loads may apply
* At the time of opening my SIP account, I had mentioned the time period as 5 years. Now I want to withdraw some money. Can I do that without paying any penalty?
– Kunal Srivastava
There is no penalty for withdrawing from a fund in which one is investing through SIP mode, as SIP and withdrawal (redemption) are two separate mandates. However, exit load may be charged for redeeming before a stipulated period. In case of investment through SIP, every instalment is treated as fresh purchase. Thus, the exit load charged will depend on the holding period of each instalment. If one is investing an amount of Rs 1,000 through monthly SIP in a fund that charges an exit load of 1% for holding period less than 1 year and now wants to withdraw towards end of 2 years, then investments made in the first 12 months will not attract exit load. Investments made after 12 months will attract the 1% exit load. Withdrawal from a plan does not automatically stop the SIP. Your SIP instalments will continue to purchase fresh units, even as you withdraw from the fund. Hence, if you do not want to continue with the SIP, then you would need to separately request for its cancellation.
* Do I have to give KYC related documents every year to the mutual fund company?
Fulfilling KYC requirements is a one-time activity. Once it’s is done through a Sebi registered intermediary like mutual fund company, broker or depository participant, one does not have to repeat it while dealing with another Sebi registered intermediary. However, if Sebi or the government stipulates any changes in the KYC norms, the investor would need to fulfil those requirements. For e.g. , updating Aadhaar number is now mandatory, hence one would need to provide the details to the existing intermediary.
* Can I invest in a mutual fund in the name of my son who is 15 years old?
Yes, you can invest in a mutual fund in the name of your son. He would become the first and the sole holder of the folio. The guardian of the folio should be a parent (or a court-appointed guardian). You need to provide your son’s date of birth and age and a copy of proof of age. You also need to provide documentary proof of the relation between you and your son. The guardian would need to be KYC compliant . Once your son attains the age of majority, i.e. 18 years, control of the guardian over the folio would freeze. Your son would need to fulfil the KYC requirements.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to