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SEBI enables automatic SWP and STP instructions for demat mutual fund units
SEBI will roll the change out in two phases, with unit-based instructions due by 31 January 2027 and amount-based instructions by 30 April 2027.
Securities and Exchange Board of India (SEBI) has allowed mutual fund investors who hold units in demat form to set automatic standing instructions for systematic withdrawal plans and systematic transfer plans, rather than submitting a fresh request for each transaction, according to a circular issued by the regulator. The regulator said investors can choose either standing instructions or one-time instructions for SWPs and STPs. SEBI’s move aims to end a long-standing gap between automatic instruction options for mutual fund units held in statement of account form versus those held electronically in demat accounts. SEBI said the rollout will occur in two phases, with unit-based instructions by 31 January 2027 and amount-based instructions by 30 April 2027. Depositories have been tasked with implementing the framework and publishing operational guidelines by 31 October 2026. The new capability is intended to streamline processes that previously required multiple steps for every transaction through demat holdings. The circular noted that automatic instructions were previously available only for SOA holdings, while demat investors had to submit separate instructions for each withdrawal or transfer, including execution steps involving brokers, the stock exchange, clearing, and communication with the mutual fund registrar before units are credited.