SIP Bounce Charges: Bank-Wise Penalties, Fees & How to Avoid Them
Introduction
Systematic Investment Plans (SIPs) are designed to make investing disciplined and effortless. However, when a SIP instalment fails due to insufficient balance, investors often face an unexpected cost known as a SIP bounce charge. These charges are levied by banks, not mutual fund companies, and can significantly impact investors, especially those running multiple SIPs or investing small monthly amounts.
This article explains what SIP bounce charges are, why they are levied, and provides a bank-wise comparison of charges across major Indian banks.
What Is a SIP Bounce?
A SIP bounce occurs when a bank fails to honour an ECS or NACH auto-debit instruction on the SIP due date. The most common reason is insufficient balance in the linked bank account. Other reasons may include dormant accounts, mandate expiry, or technical failures.
Important point for investors: mutual fund houses do not impose any penalty for a missed SIP. The charge is strictly a bank fee for a failed auto-debit transaction.
Why SIP Bounce Charges Matter
SIP bounce charges are usually fixed amounts and do not depend on the SIP size. This means the penalty can be disproportionately high for smaller SIPs.
For example, a ₹500 SIP that bounces in a private bank may attract a ₹500 charge plus GST, effectively wiping out an entire month’s investment value.
Repeated SIP failures may also lead to automatic SIP cancellation by the mutual fund after multiple consecutive bounces.
SIP Bounce Charges Across Major Banks in India
The table below summarises typical ECS/NACH return charges levied by leading banks. Charges mentioned are per failed transaction and generally attract GST at applicable rates.
| Bank Name | SIP Bounce Charges |
|---|---|
| State Bank of India | ₹250 |
| Punjab National Bank | ₹250 |
| Bank of India | ₹250 |
| Indian Overseas Bank | ₹250 |
| Canara Bank | ₹300 to ₹2,000 depending on amount slab |
| Union Bank of India | ₹400 |
| HDFC Bank | ₹450 first bounce, ₹500 second, ₹550 thereafter |
| ICICI Bank | ₹500 |
| Axis Bank | ₹500 first bounce, ₹550 subsequent |
| Kotak Mahindra Bank | ₹500 |
| IDFC First Bank | ₹350 up to three bounces, ₹750 thereafter |
| IndusInd Bank | ₹350 first in a quarter, ₹500 subsequent |
| Federal Bank | ₹250 first bounce, ₹500 subsequent |
| RBL Bank | ₹500 |
| IDBI Bank | ₹500 |
| South Indian Bank | ₹50 |
| Yes Bank | ₹200 |
Actual charges may vary based on account type, relationship value, or updates in the bank’s schedule of charges.
How SIP Bounce Charges Add Up
Consider an investor running five SIPs of ₹2,000 each from a private bank account. If all five debits fail in a month and the bank charges ₹500 per bounce, the total penalty becomes ₹2,500 plus GST. This is equivalent to more than one full SIP instalment lost purely as bank charges.
For retirees or conservative investors using SIPs in hybrid or debt funds, such penalties can significantly affect cash flow planning.
How to Avoid SIP Bounce Charges
Maintaining adequate balance before the SIP date is the simplest solution. Investors should ideally keep a buffer equal to at least one additional SIP instalment.
Scheduling SIP dates a few days after salary or pension credit reduces the risk of insufficient funds.
Linking SIPs to a primary operating bank account rather than a low-balance secondary account is another effective safeguard.
Investors with temporary cash flow constraints should pause SIPs instead of allowing repeated bounces, as pausing carries no penalty.
Takeaways for Investors
SIP bounce charges are bank penalties, not mutual fund penalties. Charges can be disproportionately high compared to the SIP amount, especially in private banks. Multiple SIPs failing on the same date multiply the impact. A little cash-flow planning can completely eliminate this avoidable cost.
If you are managing multiple SIPs and want to align them better with your cash flows, retirement income, or investment goals, contact CapitaGrow for personalised guidance.
Author Bio
Rajesh Narayanan is a mutual fund distributor and founder of CapitaGrow. He specialises in goal-based investing, retirement focussed funds, and investor education through seminars for corporates, schools, and colleges.
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