SEBI is actively evaluating a proposal to enable investors holding mutual fund units in demat form to utilize Systematic Withdrawal Plans (SWP) and Systematic Transfer Plans (STP), aiming to create parity with those in the statement of account (SOA) mode, according to sources familiar with the matter.
Currently, investors with mutual fund units in demat form lack access to a one-time instruction for SWP/STP. SWP allows investors to withdraw a predetermined amount or set of units from their funds regularly, while STP facilitates the transfer of funds between different schemes, such as moving from a debt fund to an equity fund.
“The goal is to achieve parity between mutual fund units held in SOA mode and those in demat mode by extending SWP and STP facilities,” a regulatory insider stated. This initiative is also expected to enhance the ease of doing business and minimize redundant paperwork for investors.
Investors with demat holdings must either submit repeated redemption instructions via forms for each installment or execute a Power of Attorney/Demat Debit and Pledge Instruction to a broker. In contrast, those holding units in SOA mode can access SWP and STP options through a single mandate.
A working group comprising members from stock exchanges, depositories, and registrar and transfer agents (RTAs) has suggested a two-phase implementation for this facility, considering the substantial system-level adaptations required, as noted by a source from the depository.
In the initial phase, only unit-based SWP and STP will be allowed, processed through depositories, clearing corporations, and exchanges. The second phase will expand to amount-based transactions, which will require additional responsibilities for RTAs in calculating net asset values (NAVs) and units. This phase will also introduce options for STP transfers involving liquid or overnight funds, enabling systematic movements into other schemes.
“Necessary interfaces and inter-linkages will be established by depositories, exchanges, clearing corporations, and RTAs,” another insider revealed. “Standard operating guidelines will be jointly released by exchanges and depositories to ensure seamless execution.”
Once an investor registers a mandate either online or offline with a depository participant or trading member, the system will automatically generate debit and credit transactions based on specified parameters, including dates, frequency, and unit quantities. In the case of SWPs, payments will be credited to the investor’s registered bank account, while STPs will facilitate unit transfers into the selected scheme.
Published on September 25, 2025.
