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SIP Stoppage normalizes; Contributing SIPs above 94%

11 Jul 2025 , 09:46 AM

AFTER A VOLATILE YEAR, SIP STOPPAGE RATIO NORMALIZES

The big story up to April 2025 was the surge in SIP stoppage ratio, with the ratio consistently being above 100%. That is now history as the SIP stoppage ratio in the last two months has stayed under 80%. In comparison to previous financial years, this is still high, but we have to look at the SIP stoppage ratio in the context of the elevated levels of the market, the global uncertainty, and the rising Buffett Ratio. It is in this context that the below table on the SIP stoppage ratio for the last 1 year becomes interesting.

Transaction Month	New SIP Registrations	Total SIPs Discontinued	SIP Stoppage Ratio
Jun-25	61.91	48.16	77.79%
May-25	59.15	42.66	72.12%
Apr-25	46.01	162.32	352.79%
Mar-25	40.19	51.55	128.27%
Feb-25	44.56	54.70	122.76%
Jan-25	56.19	61.33	109.15%
Dec-24	54.27	44.91	82.75%
Nov-24	49.47	39.14	79.12%
Oct-24	63.70	38.80	60.91%
Sep-24	66.39	40.31	60.72%
Aug-24	63.94	36.54	57.15%
Jul-24	72.62	37.33	51.40%
Jun-24	55.13	32.35	58.68%

Data Source: AMFI

The SIP stoppage ratio is the ratio of stopped SIPs to fresh SIPs in any month. If SIP stoppage ratio is under 100%, the pool of SIP folios is growing; but if it is above 100%, SIP folio pool is shrinking. The SIP stoppage ratio rose steadily between July 2024 and December 2024 from 51.4% to 82.8%. However, between January and April 2025, the SIP stoppage ratio spiked from 109.2% to 352.8%. In May and June 2025, the SIP Stoppage has come down to more rational levels. Behind this roller-coaster, is an interesting story!

WHY THE SPIKE IN SIP STOPPAGE WAS NEVER A CAUSE FOR WORRY?

Normally, the SIP stoppage ratio staying above 100% for 4 months in a row and touching 352% should have set alarm bells ringing. However, there was a logic to it. Between January and April 2025, AMFI and stock exchanges undertook total reconciliation of SIP folios. The reason was that; as per SEBI regulations on defunct folios, it was implemented with prospective effect. Hence, there were a large number of defunct folios prior to April 2024. They were distorting the overall SIP picture and had to be weeded out to get a clear picture.

The 4-months clean-up led to reduction of nearly 1.43 crore SIP folios. The good news is that all the SIPs, where the folios existed but SIPs were not active have been removed from the system. Now, even when you talk about SIP folios, it is a picture of genuine SIP folios, excluding defunct folios. At the end of the exercise, the SIP stoppage ratio fell from 352% in April to 72% in May. June SIP stoppage ratio is at 77.79%, but clearly the story has stabilized.

CONTRIBUTING SIP FOLIOS ARE NOW MEANINGFULLY HIGHER

As a result of the clean-up, the ratio of contributing SIPs went up sharply.

Transaction Month	Outstanding SIP Folios	Contributing SIP Folios	Contributing SIP Folio Ratio
Jun-25	919.32	864.70	94.06%
May-25	905.57	856.00	94.53%
Apr-25	889.08	838.25	94.28%
Mar-25	1,005.39	811.16	80.68%
Feb-25	1,016.75	826.41	81.28%
Jan-25	1,026.89	834.97	81.31%
Dec-24	1,032.03	827.44	80.18%
Nov-24	1,022.67	797.32	77.96%
Oct-24	1,012.34	794.48	78.48%
Sep-24	987.44	774.61	78.45%
Aug-24	961.36	745.10	77.50%
Jul-24	933.96	724.79	77.60%
Jun-24	898.67	670.42	74.60%

Data Source: AMFI

The Contributing SIP ratio is the ratio of Contributing SIP folios to total SIP folios. Thanks to the removal of the defunct SIP folios, the contributing SIPs continue to move steadily higher, with the ratio of Contributing SIP folios staying above 94% for the last 3 months in a row. This ratio was under 80% till November 2024 and just around 80% till March. It is simple mathematics. By cutting defunct folios, the contributing SIP ratio is automatically better!

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