Sebi has allowed investors holding mutual fund units in demat accounts to set up standing instructions for SWPs and STPs, bringing greater convenience and flexibility.
Highlights
- Sebi allows SWP and STP standing instructions for demat-held mutual funds.
- Facility was earlier available only for SOA-based mutual fund units.
- Implementation will take place in two phases.
- Unit-based SWP/STP to begin by January 31, 2027.
- Amount-based SWP/STP to roll out by April 30, 2027.
- Depositories will act as nodal agencies for implementation.
The Securities and Exchange Board of India (Sebi) has announced a major investor-friendly reform by allowing standing instructions for Systematic Withdrawal Plans (SWPs) and Systematic Transfer Plans (STPs) for mutual fund units held in demat form.
Until now, investors could create standing instructions for SWPs and STPs only for mutual fund units held in Statement of Account (SOA) form through Asset Management Companies (AMCs) or their Registrar and Transfer Agents (RTAs). The facility was not available for investments held in demat accounts.
According to Sebi, the move aims to improve investor convenience and promote ease of doing business in the mutual fund industry. The decision follows recommendations from depositories, a Sebi-appointed working group and the Secondary Market Advisory Committee.
The new framework will be implemented in two phases. In the first phase, investors will be able to create standing instructions for unit-based SWPs and STPs, allowing a fixed number of mutual fund units to be redeemed or transferred at regular intervals. This phase will be operational by January 31, 2027.
In the second phase, Sebi will introduce amount-based SWPs and STPs, enabling investors to withdraw or transfer a fixed amount periodically. This facility is scheduled to be implemented by April 30, 2027.
Depositories have been designated as the nodal agencies for implementing the framework. They have also been directed to jointly publish a standard operational framework on their websites by October 31, 2026.
The latest reform is expected to simplify investment management for demat account holders and provide investors with greater flexibility in planning systematic withdrawals and transfers from their mutual fund portfolios.
