SIP Stoppage Ratio Normalizes After Dormant Folio Cleanup in FY25

After an abnormal spike due to SEBI's retrospective rules, SIP trends are back to normal - and more reliable

What Is SIP Stoppage Ratio and Why It Matters

In the world of mutual funds, Systematic Investment Plans (SIPs) have become the go-to route for retail investors. But like any recurring investment, SIPs too get discontinued for various reasons - some intentional, some systemic.

One useful metric that tracks this behavior is the SIP stoppage ratio: It is defined as:

Historically, this ratio hovers between 45% to 50%. During the COVID-19 pandemic, it rose sharply above 65%, as many investors paused or exited their SIPs due to financial uncertainty.

But in early 2025, the stoppage ratio spiked to over 350%, raising eyebrows. Was investor confidence collapsing? Not quite.

Let’s break it down.

Why Did the SIP Stoppage Ratio Spike in Early 2025?

Between December 2024 and April 2025, the SIP stoppage ratio saw a sharp and unusual rise, peaking at 352.79% in April 2025. But the cause wasn’t panic selling or market exits - it was data correction.

Here’s what happened:

• SEBI implemented new norms to remove dormant SIP folios from mutual fund records.
• These rules took effect from April 2024 prospectively.
• Then, between January and April 2025, the rules were applied retrospectively across all past folios.
• As a result, around 1.43 crore dormant folios were extinguished from AMFI records.

These weren’t fresh investor exits - but long-dead SIPs finally being cleaned up. The spike in discontinuations was technical, not behavioral.

A Look at the Monthly Data

Let’s examine how the stoppage ratio and contributing SIP folios changed month over month.

Source: Association of Mutual Funds in India (AMFI), Monthly data for April–May 2025. View original data here.

Contributing SIPs: A Clearer Indicator of Investor Engagement

The contributing SIP ratio is defined as:

This is now the more meaningful number for fund houses and advisors. As of May 2025:

• India had 905.57 lakh SIP folios, of which
• 856 lakh were actually contributing funds - a contribution ratio of 94.53%

This is the highest level in over a year, and it’s a positive structural shift, not a temporary recovery.

Key Takeaways from the SIP Trend

• The spike in stoppage ratio between Dec-24 and Apr-25 was largely due to retrospective folio clean-up.
• SEBI’s dormant folio rule removed dead data, improving SIP contribution accuracy.
• May 2025 shows normalized SIP behavior, making the data more actionable for forecasting.
• Contributing SIP ratio above 94% means investors are actively funding their SIPs.
• Future stoppage trends will now reflect true investor behavior, not legacy backlogs.
• Some genuine exits were part of the cleanup, but most were non-functioning folios.

Why This Matters for SIP Investors

For long-term mutual fund investors, this clean-up is a good thing.

• The data is now more reliable, helping you judge market sentiment better.
• You can track real contribution trends, not inflated discontinuation numbers.
• Fund houses too can better plan investor communication, retention, and product strategies.

Don’t let the April 2025 spike confuse you - it was a technical anomaly, not a sign of falling investor trust.

Disclaimer: The content in this article is for informational and educational purposes only. It should not be construed as investment advice. Please consult a qualified financial advisor before making any investment decisions.