New Delhi: Capital markets regulator Securities and Exchange Board of India (SEBI) has proposed extending the facility of standing instructions for Systematic Withdrawal Plans (SWP) and Systematic Transfer Plans (STP) to mutual fund units held in dematerialised (demat) form, a move aimed at enhancing investor convenience and simplifying operational processes.
Currently, investors can set up standing SWP and STP instructions only for mutual fund units held in statement of account (SOA) mode. Those holding units in demat form must submit separate instructions for each withdrawal or transfer, making systematic transactions more time-consuming and complex.
In a consultation paper released on Thursday, SEBI said the proposed framework would help align processes across the mutual fund ecosystem and improve ease of doing business for all stakeholders, including investors, fund houses, stock exchanges, depositories, and registrars.
The regulator noted that the proposal would be especially beneficial for retirees, long-term investors, and individuals using mutual funds for regular income or periodic portfolio rebalancing. It could also reduce dependence on blanket powers of attorney, thereby strengthening investor control over their investments.
SEBI has suggested a two-phase implementation of the proposal. In the first phase, investors would be able to register unit-based, date-specific SWP and STP mandates through depositories or stock exchange members. These instructions would be executed on stock exchange platforms with minimal system changes required at registrars and transfer agents (RTAs).
In the second phase, once processing of standing instructions is routed through RTAs, the framework would be expanded to include amount-based withdrawals, appreciation-based switches, and swing STPs, offering greater flexibility to investors.
The proposal is based on recommendations from a working group comprising representatives of stock exchanges, depositories, and RTAs, and was further examined by SEBI’s Secondary Market Advisory Committee.
SEBI has invited public feedback on the consultation paper before finalising the framework.