Securities and Exchange Board of India
The Securities and Exchange Board of India (SEBI) has proposed to simplify the redemption process for millions of investors holding mutual fund units in demat accounts. Under this, it has been said to start automated standing instructions. In a consultation paper released on 5 February 2026, SEBI has suggested reducing the difference between demat and Statement of Account (SOA) modes. Its purpose is that Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) can run automatically without manual intervention every time.
At present, demat account holders have to give new instructions every time to withdraw or transfer money. SEBI believes that this hassle should end so that automatic withdrawal can be possible even in mutual funds purchased through the stock exchange.
The hassle of DIS will end
The regulator has admitted that currently the manual requirement of Delivery Instruction Slip (DIS) is a big problem for investors. To withdraw money every month or quarter, different forms have to be filled, which causes delay and people avoid taking SWP/STP in demat mode.
Complete control without power of attorney
To avoid this hassle, many investors give Power of Attorney (PoA) to the broker, but this reduces direct control over the investment. SEBI wants that the standing instructions should be directly in the depository system, so that the investor remains in complete control and also gets convenience.
Settlement process will be easy
At present, every installment of STP has to go through a lengthy process between the broker, exchange and clearing corporation. Sell and buy orders have to be placed every time, due to which there is a possibility of error and delay. The new system is an attempt to make it automatic.
Automation with RTA
SEBI proposes to automatically transfer data between the depository and the RTA (Registrar and Transfer Agent) on a fixed date through standing instructions. With this, there will be no need to place new orders every time and the money will reach the bank account directly.
working group recommendation
For this, SEBI had formed a working group of experts from exchange, depository and RTA. The group recommended that just like SWP/STP facility is available in SOA mode, the same facility should be available to demat holders also.
The system will be implemented in two phases
In the first phase, the facility of unit-based SWP/STP will be introduced, in which fixed units can be sold or transferred at regular intervals. In the second phase, advanced options like amount-based SWP/STP, swing STP and profit-based withdrawal will also be available. Overall, this step of SEBI is being considered as a big change in the direction of making mutual fund investment in demat account more easy, safe and investor-friendly.