The Securities and Exchange Board of India (SEBI) has approved standing instructions for Systematic Withdrawal and Transfer Plans in demat accounts. This update allows investors to automate regular redemptions or scheme transfers directly through their depository. The facility will be introduced in two phases, starting with unit-based transactions by January 2027 and amount-based options by April 2027.
The Securities and Exchange Board of India (SEBI) has introduced a major change for mutual fund investors who hold units in demat form. In a move to improve operational efficiency, the regulator has permitted the use of standing instructions for Systematic Withdrawal Plans (SWP) and Systematic Transfer Plans (STP) within demat accounts. This change aligns demat-based mutual fund holdings with the flexibility previously offered primarily to investors holding units in the physical statement of account (SOA) format.
Phased Rollout Schedule
Investors can expect this feature to be available through their depository participants in two distinct stages. The first phase, which is set to be operational by January 31, 2027, will focus on unit-based standing instructions. This allows investors to automate the redemption of a specific number of mutual fund units or transfer a fixed quantity of units between schemes within the same fund house.
The second phase, aimed for completion by April 30, 2027, will introduce amount-based standing instructions. This will provide more precision for financial planning, as it enables investors to request the withdrawal or transfer of a specific monetary amount at set time intervals. By extending these capabilities to demat accounts, SEBI is reducing the manual effort required for periodic transactions, which were previously more cumbersome for demat holders.
Role of Depositories and Implementation
Central depositories will lead the implementation of this framework. They are required to work together to publish a standardized operational procedure on their official websites by October 31, 2026. This common framework will ensure that the transition is uniform across all depository participants, providing a consistent experience for investors regardless of their service provider.
For investors, this shift represents a move toward centralized management of financial assets. By enabling automated flows within the demat ecosystem, the regulator is simplifying the user journey, making it easier to manage cash flow from mutual fund investments without needing to log in to multiple platforms or submit physical requests to registrars and transfer agents. Investors should monitor updates from their specific depository participants closer to the 2027 implementation dates to understand the exact process for setting up these new instructions.