Until now, investors could set up standing instructions for periodic withdrawals or transfers only if their mutual fund units were held in non-demat form through asset management companies (AMCs) or their registrars and transfer agents (RTAs). The latest move aims to bring parity between demat and non-demat investors while improving convenience and ease of doing business.
Under the new framework, the facility will be rolled out in two phases.
In the first phase, investors will be able to create unit-based SWP and STP mandates, allowing a fixed number of mutual fund units to be redeemed periodically or transferred from one scheme to another within the same mutual fund.
The second phase will introduce amount-based SWP and STP mandates, enabling investors to instruct fixed-value withdrawals or transfers at specified intervals.
SEBI has designated depositories as the nodal agencies for implementing the framework. They have been directed to roll out the Phase I facility by January 31, 2027, while Phase II must be implemented by April 30, 2027.
Before that, the depositories will jointly publish a standard operational framework by October 31, 2026, besides making the necessary amendments to their bye-laws, rules and systems.
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The market regulator said the decision follows representations from depositories, recommendations of a SEBI-appointed working group and inputs from the Secondary Market Advisory Committee. The circular comes into force with immediate effect and is aimed at making mutual fund investing more seamless for investors who choose to hold their units in demat accounts.
