The Securities and Exchange Board of India (SEBI) has introduced a significant enhancement to mutual fund investment convenience by allowing investors to create standing instructions for Systematic Withdrawal Plans (SWPs) and Systematic Transfer Plans (STPs) on mutual fund units held in demat form. This development extends the existing facility that was previously available only for mutual fund units held in statement of account (SOA) form through asset management companies (AMCs) or their registrar and transfer agents (RTAs). As reported by Rediff Moneynews, SEBI's decision aims to improve investor convenience and ease of doing business, with the framework being implemented in two phases.
The new SWP/STP facility will be implemented in a structured timeline to ensure proper system integration. In the first phase, investors will be able to create standing instructions for unit-based SWPs and STPs, allowing redemption of a fixed number of mutual fund units at a specified frequency for withdrawals or for transferring investments to another scheme of the same mutual fund. In the second phase, the facility will be extended to amount-based SWPs and STPs, enabling investors to redeem or transfer a fixed amount at periodic intervals. According to Rediff Moneynews, depositories have been designated as the nodal facilitators for implementing the framework, with SEBI directing depositories to roll out the unit-based SWP/STP facility by January 31, 2027, while the amount-based facility will be implemented by April 30, 2027.
Under the revised standard operating procedure (SOP), asset management companies (AMCs) now have greater flexibility in handling address discrepancies. As reported by Business Standard, AMCs can rely on the latest available address of the deceased unit holder, supported by relevant documents, if the address in the records does not match. This provision aims to eliminate delays caused by address verification issues during the transmission process, ensuring a more uniform approach while processing transmission requests. The updated SOP guidelines have been communicated to all member AMCs and take effect immediately, as confirmed by the Association of Mutual Funds in India (AMFI).
AMFI has introduced a harmonised approach for resolving name and signature discrepancies, allowing AMCs to follow the framework prescribed for Registrar and Transfer Agents (RTAs) for handling minor and major name and signature mismatches. This development addresses previous operational difficulties faced by nominees and legal heirs in completing transmission formalities due to minor documentation inconsistencies. The changes are specifically designed to reduce documentation-related hurdles that families previously faced while claiming mutual fund investments, with the revised framework being implemented through AMFI to standardise documentation requirements and speed up claim settlements across the mutual fund industry.
The changes follow specific concerns over operational difficulties faced by families while claiming mutual fund investments because of minor documentation discrepancies. As reported by Business Standard, SEBI will conduct training programmes for AMCs to ensure uniform implementation of the updated procedures. This training initiative is designed to ensure consistent application of the new simplified transmission process across all asset management companies, reducing the compliance burden on nominees and helping speed up settlements across the mutual fund industry. Additionally, depositories have been asked to jointly publish a standard operational framework on their websites by October 31, 2026, as reported by Rediff Moneynews, to provide clear guidelines for implementing the new SWP/STP facilities. The changes are in line with regulatory efforts to protect investor interests and make the claims process less cumbersome for bereaved families.
