How to Stop or Pause SIP in a Mutual Fund? Step-by-Step Process for All Major Platforms

Many investors look for how to pause or stop SIPs in a mutual fund when they encounter certain situations, including: 

• Financial emergencies: Sometimes short- or long-term financial emergencies like job loss, medical expenses, or family emergencies may force investors to pause or stop SIPs in mutual funds.
• Scheme underperformance: If the scheme consistently lags behind peers and its benchmark, investors may choose to rebalance for better options. 
• Achievement of financial goals: If your linked goal was making the down payment on a home or buying a car and that has been achieved, it makes sense to cancel the SIP. 
• Concerns about market volatility: Sometimes investors also pause or cancel SIPs when markets turn volatile to prevent further potential losses. However, this is generally unwise as SIPs work on rupee cost averaging that averages short-term volatility over the long run.

Before we head to pause or stop SIPs in mutual funds, let’s first understand the difference between the two:

• Pausing SIPs

Pausing your SIP means temporarily halting your SIP contributions. You simply choose a duration - say 6 months - during which your SIPs remain suspended. After that, your SIPs in the mutual fund scheme auto-resume. 

Today, most AMCs offer the SIP pause facility to ensure SIP investments stay flexible. However, AMCs do have eligibility rules for the facility. For instance, for some AMCs, you may only have access to the SIP pause facility if your SIP has completed 6 months.

• Stopping SIPs

Stopping SIPs in mutual funds generally means permanently cancelling all future installments. This means you cancel the standing instruction for the SIP. If you want to make fresh investments, you have to initiate a new SIP mandate. 

Online Method:

The exact steps to pause or cancel a SIP online may vary slightly depending on the platform through which you invested. However, the overall process is largely similar. Here's how you can generally pause or cancel your SIP online:

• Step 1: Go to your investment platform and log in using your credentials.
• Step 2: Select the ‘SIP’ or ‘My Transactions’ section. Go to the section where your active SIPs are listed. 
• Step 3: From the list of active SIPs, choose the one you wish to stop.
• Step 4: Click the ‘Pause SIP’ option if you need to pause it temporarily. Choose the ‘Cancel SIP’ option if you wish to permanently stop the SIP. 
• Step 5: For the ‘Pause’ option, specify the duration of the pause and submit.
• Step 6: Authenticate your action with the OTP received on your registered mobile number. 

Once that’s done, you will receive an email confirmation or see a confirmation message on screen. If you wish to restart your SIP before the pause window ends, simply log into the platform and choose the ‘Resume’ option.
 

Offline Method:

Here’s how you can pause/cancel your SIP offline:

Step 1: Request a SIP cancellation/pause form from your AMC.

Step 2: Fill in all the required details like:

• Your folio number
• PAN details
• SIP scheme name
• SIP amount
• Date from which SIP is to be stopped/paused

Step 3: Submit the form at any branch of your AMC, CAMs, or KFintech.

Here’s a simple guide on when investors may consider pausing SIPs and when they may choose to stop it entirely*:

*Disclaimer: Whether you pause or stop a SIP should depend on your financial goals, cash flow, and investment plan. Frequent decisions based only on short-term market movements may not always be in your long-term interest. 

Learning how to pause or stop SIPs in a mutual fund is important for every investor. You can choose to pause your SIPs if faced with short-term financial issues like job loss. But if your goals are achieved or you are rebalancing your portfolio, knowing how to cancel your SIP can come in handy. 

While the SIP stopping process in India is fairly simple, you should understand if it's the right choice for your first by assessing the decision in the context of your broader goals. 

1. Is there a penalty for stopping SIPs in mutual funds?

No. You can pause your SIPs without penalty.

2. How many times can I pause my SIPs?

This depends on the fund house in question. Generally, most AMCs allow you to pause or stop the SIP once or twice during the entire investment duration.

3. Why is pausing SIPs in mutual funds better than missing SIPs?

When you miss SIPs, your bank may charge NACH/ECS dishonour or bounce charges. Plus, missing 3 consecutive installments can also trigger auto-cancellation of the SIP by the fund house. If you are facing short-term financial constraints and don’t wish to cancel the SIP, pausing it is a better option. 

4. Why are my SIPs not eligible for pausing?

Most AMCs offer the SIP pausing facility for monthly SIPs only. On top of that, they may have specific rules for qualification. For instance, some AMCs may require your SIP to have already completed 6 months before you can use the SIP pause facility. 

5. For how long can I pause my SIP?

Most AMCs allow you to pause SIPs for a duration of 1 to 6 months. However, the exact pausing rules and guidelines can vary. Check these before you opt for the SIP pause facility. 

6. By when do I need to send my SIP pause request to the AMC?

Generally, you need to send the SIP pause request at least 15 to 21 days before the next installment date.