A working group has proposed implementing the facility in two phases, considering the significant system-level changes
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FRANCIS MASCARENHAS
SEBI is considering a proposal to allow investors holding mutual fund units in demat form to have the facility of Systematic Withdrawal Plans (SWP) and Systematic Transfer Plans (STP) to bring parity with the statement of account (SOA) mode, people familiar with the matter said.
Currently, the facility of a one-time instruction for SWP/STP is not available with respect to mutual fund units held in demat mode. An SWP allows investors to redeem a fixed sum or set of units from their fund at regular intervals, while an STP lets them move money from one scheme to another, such as gradually transferring from a debt fund to equity.
Mode parity
“The objective is to achieve parity between mutual fund units held in SOA mode and those held in demat mode by extending SWP and STP facilities,” a regulatory source said. “This is also aimed at ease of doing business and reducing repetitive paperwork for investors.”
Investors with demat holdings are required to either submit repeated redemption instructions through forms or slips for every instalment, or execute a Power of Attorney/Demat Debit and Pledge Instruction in favour of a broker. By contrast, those holding units in statement of account mode, where units are held directly by the MFs, can already avail of SWP and STP facilities with a single mandate.
A working group, comprising representatives from stock exchanges, depositories and registrar and transfer agents (RTAs), has proposed implementing the facility in two phases, considering the significant system-level changes, a depository source said.
Transfer upgrade
In the first phase, only unit-based SWP and STP will be permitted, routed through depositories, clearing corporations and exchanges. The second phase will extend the facility to amount-based transactions, which will involve additional roles for RTAs in providing net asset values (NAVs) and unit calculations. Phase two will also introduce setting up STP options for liquid or overnight funds, which will allow systematic transfers into other schemes.
“Necessary interfaces and inter-linkages will be put in place by depositories, exchanges, clearing corporations and RTAs,” another source said. “Standard operating guidelines will be jointly issued by exchanges and depositories to ensure seamless execution.”
Once an investor registers a mandate online or offline with a depository participant or trading member, the system will auto-generate debit and credit transactions in line with the parameters specified — including dates, frequency, and number of units. For SWPs, payments will be released to the investor’s registered bank account, while STPs will transfer units into the chosen scheme.
Published on September 25, 2025