Sebi extends SWP, STP facility to demat-held mutual fund units

Sebi has allowed SWP and STP facilities for mutual fund units held in demat form, with phased implementation beginning by January 2027

Investors holding mutual fund (MF) units in demat form will soon be able to use systematic withdrawal plan (SWP) and systematic transfer plan (STP) facilities. The Securities and Exchange Board of India (Sebi) on Friday announced the extension of the two systematic transaction options to demat-held MF units. Until now, these facilities were available only for units held in the statement of account (SoA) form.

 

The regulator said the facility will be implemented in two phases. The first phase, to be rolled out by January 31, 2027, will allow investors to register unit-based SWP and STP mandates, where a fixed number of units are redeemed or transferred at a specified frequency. The second phase, to be implemented by April 30, 2027, will extend the facility to amount-based SWPs and STPs.

 

The regulator has directed depositories to jointly publish the operational framework by October 31, 2026, and carry out the required system changes.

 

The change comes at a time when online MF distributors are increasingly moving investors from the SoA mode to demat holdings. Groww, the country's largest mutual fund distributor, announced the transition last year. The growing shift to demat holdings had left investors without access to automated SWP and STP facilities. SWPs allow investors to withdraw a fixed amount or a specified number of units at regular intervals and are widely used by investors to generate a regular cash flow from their investments, while STPs help systematically shift money from one mutual fund scheme to another, typically from debt to equity.  

 

Sebi had first proposed the move in a consultation paper released on February 5, 2026.