SEBI proposes extending standing instructions for SWP and STP to demat mutual funds, simplifying transactions and improving ease of investing for investors.
Mumbai: The Securities and Exchange Board of India (SEBI) has proposed allowing investors to set up standing instructions for systematic withdrawal plans (SWP) and systematic transfer plans (STP) for mutual fund units held in demat accounts, a facility currently available only for units held in statement-of-account (SoA) mode.
Under the proposal, investors holding mutual funds in demat form would be able to complete a one-time registration of SWP and STP mandates through depositories or stock exchanges, eliminating the need to submit separate instructions for every transaction, SEBI said in a statement.
Current process is seen as restrictive
At present, demat investors must place individual redemption instructions for each SWP or STP transaction, either through a Delivery Instruction Slip (DIS), two-factor authentication with the depository participant (DP), or authorisation via Power of Attorney (PoA) or Demat Debit and Pledge Instructions (DDPI).
SEBI noted that PoA arrangements reduce the direct control of investors over their investments, prompting the regulator to propose extending the standing instruction facility to demat-held mutual fund units to improve ease of doing business (EoDB) across the mutual fund ecosystem.
Two-phase rollout planned
SEBI has outlined a two-phase implementation of the proposal.
- Phase one will allow investors to register unit-based SWP and STP mandates through depositories or stock exchanges, with transactions executed on the stock exchanges’ order entry platforms.
- Phase two will shift processing to registrars and transfer agents (RTAs) and may introduce amount-based and advanced SWP/STP variants, including appreciation-based withdrawals and swing STPs.
Public feedback invited
SEBI has invited public comments until February 26, after which the final regulatory framework may be notified.
Market analysts said the move would remove a major operational difference between demat-held mutual funds and traditional mutual fund accounts, while improving long-term investment convenience, automation and investor protection.
IANS
Published: 06 Feb 2026, 11:13 am IST
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