The Securities and Exchange Board of India (SEBI) has introduced a new facility that makes investing in mutual funds more convenient for people holding their units in demat form.
With this change, investors can now set up standing instructions for Systematic Withdrawal Plans (SWP) and Systematic Transfer Plans (STP) directly through their Registrar and Transfer Agent (RTA) or the mutual fund company.
Earlier, this facility was available only for mutual fund units held in physical form.
What Has SEBI Changed?
Under the new rule, investors holding mutual fund units in demat accounts can now automate their SWP and STP transactions.
A Systematic Withdrawal Plan (SWP) allows investors to withdraw money from their mutual fund investment at regular intervals without placing a fresh request every time.
Similarly, a Systematic Transfer Plan (STP) enables investors to automatically transfer their investment from one mutual fund scheme to another within the same fund house.
This new facility removes the need for repeated manual requests, making the investment process simpler and more convenient.
The Facility Will Be Introduced in Two Phases
SEBI has announced that the new system will be rolled out in two stages.
In the first phase, investors can create standing instructions based on the number of mutual fund units.
This means withdrawals or transfers will happen according to a fixed number of units.
In the second phase, the facility will be expanded to support amount-based transactions.
Investors will then be able to set standing instructions for withdrawing or transferring a fixed amount instead of a fixed number of units.
When Will the New Rule Take Effect?
According to SEBI’s latest circular, these provisions have come into effect immediately.
The move is expected to make mutual fund investing easier for demat account holders by giving them the same convenience that was previously available only to investors holding physical mutual fund units.
