What explains the sharp spike and fall in SIP Stoppage Ratio?

12 Jun 2025 , 09:21 AM

HOW SIP STOPPAGE RATIO PANNED OUT IN LAST 14 MONTHS

One of the most widely discussed topics in mutual fund circles in the last 6 months has been the SIP stoppage ratio. SIP stoppage is the ratio of the number SIPs discontinued in a month to the number of new SIPs registered. SIPs can get discontinued for various reasons. Investors may choose to discontinue the SIP, goals may have been met, they may be facing financial constraints, or they may have just forgotten to renew the SIP when it expired. The table below captures the month-wise SIP stoppage ratio for the last 14 months.

Transaction Month	New SIP Registrations	Total SIPs Discontinued	SIP Stoppage Ratio
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%
May-24	49.74	43.96	88.38%
Apr-24	63.65	33.25	52.24%

Data Source: AMFI

Remember, when the SIP stoppage ratio is under 100%, you are adding to the pool of outstanding SIP folios. When the ratio is above 100%, your SIP folio pool is depleting. In the above table, you find the SIP stoppage ratio rising 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%. What was the reason for the sharp spike in the SIP stoppage ratio in April 2025, and why did the ratio moderate back to 72.1% in May 2025?

STORY BEHIND THE VOLATILE SIP STOPPAGE RATIO

The spike in SIP stoppage ratio between July 2024 and December 2024 was due to heightened fear factor. Trump was threatening reciprocal tariffs, global growth was slowing and Indian stock market valuations (as measured by Buffett Ratio) were at historic highs. That was a case for an increase in the SIP stoppage ratio. However, the spike in SIP stoppage ratio between January 2025 and April 2025 was an entirely different story.

The spike in the SIP stoppage ratio to 352% in April was led by a massive reconciliation of MF folios with mutual fund registrars and the stock exchanges. In April 2024, SEBI had implemented stringent classification norms for dormant accounts. Monthly SIP folios inactive for 3 months or quarterly SIP folios inactive for 2 quarters were to be classified as dormant. That has been happening prospectively from April 2024 onwards.

However, that still left out the legacy dormant SIP folios prior to April 2024. Between January 2025 and April 2025, these legacy SIP folios were cleaned up, which explains the massive surge in the SIP stoppage ratio. During this period, the total folio count of SIPs fell by more than 1.43 Crore SIP folios

GOOD NEWS – THERE ARE MORE CONTRIBUTING SIP FOLIOS NOW

One of the positive aspects of this clean-up is that the ratio of contributing SIPs has gone up sharply, as evidenced in the table below.

Transaction Month	Outstanding SIP Folios	Contributing SIP Folios	Contributing SIP Folio Ratio
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%
May-24	875.89	658.24	75.15%
Apr-24	870.11	637.84	73.31%

Data Source: AMFI

About a year back, the ratio of Contributing SIP folios to overall SIP folios was ranging between 73% and 75%. With the completion of the clean-up of the dormant SIP folios, the ratio of contributing SIP folios has sharply gone up to 94.53%. That is a substantial improvement, since the dormant SIPs were adding to the folio numbers, but were not contributing to the SIP pool. Now, that has changed.

The good thing is that there is finally greater clarity about the reason for the spike in SIP stoppage ratio. Now, the hope is that it gradually eases to the equilibrium range of 45% to 55%, which is where it was in the best years.