Consultation Paper Dated 05.02.2026
The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing to extend the standing instruction facility for Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) to mutual fund units held in demat form.
1. Existing Framework and Issue Identified
At present:
- The standing instruction facility for SWP/STP is available only for mutual fund units held in Statement of Account (SOA) mode.
- Investors holding mutual fund units in demat form are required to provide separate instructions for each SWP or STP transaction.
SEBI has noted that this differential treatment:
- Creates operational inconvenience for investors
- Increases compliance and processing effort for intermediaries
- Leads to inconsistency in processes across holding modes
2. Objective of the Proposal
The proposal seeks to:
- Align the process for mutual fund units held in demat form with those held in SOA mode
- Facilitate ease of doing business for investors and market participants
- Improve operational efficiency and standardisation in mutual fund transactions
3. Proposed Extension of Standing Instruction Facility
Under the proposed framework:
- Investors holding mutual fund units in demat form would be allowed to provide standing instructions for SWP and STP
- Once registered, such instructions would enable automatic execution of transactions without the need for repeated authorisations
4. Phased Implementation Approach
SEBI has further proposed that:
- The regulatory framework for standing instructions for SWP/STP mandates for demat-held mutual fund units be implemented in two phases
- A phased rollout would help address operational, system, and coordination challenges among market intermediaries
5. Invitation for Public Comments
In view of the implications for:
- Investors
- Mutual funds
- Depositories
- Stock exchanges and other intermediaries
SEBI has invited public comments and suggestions on the proposals outlined in the consultation paper.
6. Timeline for Submission of Comments
-
Last date to submit comments – 26 February 2026
Stakeholders are encouraged to provide their feedback within the stipulated timeline to assist SEBI in finalising the framework.
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