Mutual fund investors holding units in demat form will soon be able to use Systematic Withdrawal and Transfer plans. Sebi has mandated a phased rollout starting January 2027 to align demat features with traditional account statements. This change simplifies regular income and asset reallocation strategies for investors using digital platforms.
Mutual fund investors who prefer holding their units in dematerialized (demat) form will soon gain access to Systematic Withdrawal Plans (SWP) and Systematic Transfer Plans (STP). The Securities and Exchange Board of India (Sebi) has directed depositories to enable these automated features, which were previously largely restricted to the Statement of Account (SoA) mode.
Phased Rollout Schedule
The regulator has set a clear timeline for the integration of these services. By January 31, 2027, the first phase will begin, allowing investors to set up unit-based mandates. This feature enables the redemption or transfer of a specific number of units at regular intervals. The second phase, targeted for April 30, 2027, will introduce amount-based SWPs and STPs. This addition provides investors with the flexibility to withdraw or move a fixed monetary value, which is often more convenient for financial planning.
To ensure the infrastructure is ready, Sebi has instructed depositories to finalize the operational framework by October 31, 2026. This period allows sufficient time for technology systems to be updated, ensuring that investors can manage their portfolios seamlessly across different mutual fund schemes.
Impact on Digital Investing
This move addresses a growing gap in the digital investment landscape. In recent years, many investors have shifted from traditional SoA-based investments to demat accounts, driven by the ease of use offered by online stockbrokers and mutual fund distributors. While demat accounts offer a consolidated view of financial assets, the lack of automated SWP and STP options had historically made them less attractive for investors seeking passive income or systematic asset allocation.
By bringing these features to the demat ecosystem, the regulator is removing a barrier that previously forced many investors to maintain separate SoA-based portfolios alongside their demat holdings. This standardization is expected to provide greater convenience for long-term investors who rely on SWPs for regular cash flow or STPs to rebalance their equity and debt exposure automatically. Investors should track future communications from their respective brokers or depository participants regarding the activation of these features as the implementation deadlines approach.