SEBI has announced a major relief for investors who hold mutual fund units in their demat accounts.
The market regulator has now allowed these investors to set up automatic instructions for Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP).
The decision is aimed at making mutual fund investing simpler and more convenient for investors.
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What Has Changed?
Until now, the SWP and STP facility was available only for mutual fund units held in Statement of Account (SOA) form with Asset Management Companies (AMCs) or their Registrar and Transfer Agents (RTAs).
Investors holding mutual fund units in demat accounts could not use these automatic withdrawal and transfer features. With SEBI’s latest decision, that restriction has been removed.
Rollout Will Happen in Two Phases
SEBI will introduce the new facility in two stages.
Phase 1: Investors will be able to set up unit-based SWP and STP. This means they can automatically withdraw or transfer a fixed number of mutual fund units at a scheduled time.
Phase 2: Investors will also get amount-based SWP and STP. This will allow them to withdraw or transfer a fixed amount of money at regular intervals based on their investment needs.
SEBI has asked depositories to launch the unit-based facility by January 31, 2027, while the amount-based facility must be available by April 30, 2027.
The complete process must also be published on their websites by October 31.
What Are SWP and STP?
A Systematic Withdrawal Plan (SWP) allows investors to withdraw a fixed amount or a fixed number of mutual fund units at regular intervals.
A Systematic Transfer Plan (STP) lets investors gradually transfer money from one mutual fund scheme to another within the same fund house.
These features help investors manage their investments in a planned and disciplined way.
How Will Investors Benefit?
The new rule will make investment management easier for people who keep their mutual fund units in demat accounts.
Earlier, they had to manage withdrawals and transfers manually or could not use these facilities at all. Now, they will be able to automate these transactions just like investors holding units in SOA form.
AMFI Also Simplifies Nominee Claims
In another investor-friendly move, the Association of Mutual Funds in India (AMFI) has made it easier for nominees to claim mutual fund investments after an investor’s death.
The new rules relax minor mismatches related to the investor’s name, address, or signature. These changes have come into effect immediately.
If the address recorded in the deceased investor’s account is different from the current address, Asset Management Companies (AMCs) can now accept the latest address, provided the nominee submits the required supporting documents.