The Securities and Exchange Board of India (SEBI) has allowed investors holding mutual fund units in demat form to create standing instructions for Systematic Withdrawal Plans (SWPs) and Systematic Transfer Plans (STPs). The move is aimed at improving investor convenience and expanding digital facilities for mutual fund transactions.

Currently, investors can set up 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 units maintained in demat accounts, creating a limitation for investors who hold mutual fund investments through depository platforms.

In a circular issued on Friday, SEBI said it has decided to extend the facility to mutual fund units held in demat form to promote ease of doing business. The decision was taken after reviewing representations from depositories and considering recommendations from a SEBI-formed working group and the Secondary Market Advisory Committee.

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The new framework will be introduced in two phases. In the first phase, investors will be allowed to create standing instructions for unit-based SWPs and STPs. Under this arrangement, investors can redeem a fixed number of mutual fund units at regular intervals for withdrawals or transfer those units to another scheme within the same mutual fund.

The second phase will introduce amount-based SWP and STP facilities for demat-held mutual fund units. This will allow investors to set instructions for redeeming or transferring a fixed amount at periodic intervals, providing greater flexibility in managing their investments.

SEBI has appointed depositories as the nodal agencies responsible for implementing the new framework. The regulator has directed depositories to introduce the unit-based SWP and STP facility by January 31, 2027, while the amount-based facility is scheduled for implementation by April 30, 2027. Depositories have also been instructed to jointly publish a standard operational framework on their websites by October 31, 2026.

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