Summary of this article
Sebi allows SWP and STP for mutual funds held in demat accounts
Facility will roll out in two phases, ending by April 2027
Depositories will implement the framework and publish operational guidelines
Securities and Exchange Board of India (Sebi) has allowed investors holding mutual fund units in demat form to register standing instructions for Systematic Withdrawal Plans (SWPs) and Systematic Transfer Plans (STPs), bringing a long-awaited feature to demat-held mutual fund investments. The facility, which is currently available only for units held in statement of account (SOA) form, will be rolled out in two phases, with full implementation scheduled by April 30, 2027.
Under the existing framework, investors can set up standing instructions for SWPs and STPs only through mutual funds or their registrar and transfer agents (RTAs) when their units are held in SOA form. Such mandates cannot currently be created for mutual fund units held in demat accounts.
"In this context, taking into account the representations received from the Depositories, recommendations of a Working Group setup by Sebi and recommendations of Secondary Market Advisory Committee of Sebi, it has been decided to extend the facility of creating standing instruction for SWP/STP mandate for the Mutual Fund units held in demat form, to facilitate ease of doing business," the market regulator said in a circular dated July 17, 2026.
The rollout will happen in two stages. In the first phase, investors will be able to create unit-based SWP and STP mandates, allowing a fixed number of mutual fund units to be redeemed at a specified frequency. For STPs, the redemption proceeds will be used to purchase units of another scheme of the same mutual fund.
The second phase will introduce amount-based SWP and STP mandates, enabling investors to give standing instructions for periodic withdrawals or transfers of a fixed monetary amount.
Sebi has designated depositories as the nodal facilitators for implementing the framework. They have been directed to operationalise the unit-based facility by January 31, 2027, while the amount-based facility must be in place by April 30, 2027.
Before the rollout, depositories will jointly publish a standard operating framework by October 31, 2026. They have also been asked to amend relevant bye-laws, rules and regulations wherever necessary, undertake system changes required for implementation, and publish the circular on their respective websites.
