SEBI has announced a major relief for mutual fund investors who hold their units in demat accounts.
Investors will soon be able to set up automatic instructions for Systematic Withdrawal Plans (SWP) and Systematic Transfer Plans (STP).
The move is aimed at making mutual fund investing simpler and more convenient.
Until now, this facility was available only for mutual fund units held in Statement of Account (SOA) format with Asset Management Companies (AMCs) or their Registrar and Transfer Agents (RTAs).
Investors with mutual fund units in demat accounts could not use automatic SWP or STP instructions.
New Rule Will Be Introduced in Two Phases
SEBI will roll out the new system in two stages.
In the first phase, investors will be able to give unit-based SWP and STP instructions.
This means they can withdraw a fixed number of mutual fund units or transfer a fixed number of units to another scheme within the same mutual fund.
In the second phase, investors will get the amount-based facility. They will be able to automatically withdraw or transfer a fixed amount at regular intervals based on their investment needs.
SEBI has asked depositories to launch the unit-based facility by January 31, 2027. The amount-based facility must be available by April 30, 2027.
The complete process and guidelines 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) allows investors to gradually transfer their investment from one mutual fund scheme to another within the same fund house.
These options help investors manage their money in a more planned and disciplined way.
How Investors Will Benefit
Earlier, investors holding mutual fund units in demat accounts could not set up automatic withdrawal or transfer instructions.
With SEBI’s new rule, demat account holders will also get this facility, making it easier to manage investments without placing manual requests every time.
AMFI Also Simplifies Nominee Claim Process
In another investor-friendly move, the Association of Mutual Funds in India (AMFI) has simplified the process of transferring mutual fund units to nominees after an investor’s death.
AMFI has relaxed rules related to minor differences in an investor’s name, address, or signature.
If the address recorded in the deceased investor’s mutual fund records is different from the current address, Asset Management Companies (AMCs) can now accept the latest address, provided the required documents are submitted.
This change has come into effect immediately and is expected to make the claim process faster and easier for nominees.
