SEBI lets demat mutual fund holders set up SWP and STP — but not before 2027

Millions of investors who hold mutual fund units in a demat account — the same account used for stocks — have never been able to set up a Systematic Withdrawal Plan (SWP) or Systematic Transfer Plan (STP) directly on those holdings. That is now changing, but not overnight.

What SEBI announced

In a circular dated 17 July 2026, SEBI directed depositories (NSDL and CDSL) and asset management companies to build a joint framework that lets investors register standing instructions for SWP and STP on mutual fund units held in demat form. Until now, these facilities were available only for units held directly with an AMC or registrar (like CAMS or KFintech) — not for units sitting in a demat account.

Why this matters

Many investors — especially those who buy mutual funds through their stockbroker’s app alongside equities — end up holding units in demat form without realising they can’t easily automate a monthly withdrawal or shift money into another scheme. They’ve had to either convert holdings out of demat first, or handle withdrawals manually. This has been a long-standing gap between the “broker route” and the “direct/AMC route” for mutual fund investing.

The rollout timeline

The facility isn’t live yet. Per SEBI’s circular:

Milestone	Deadline
NSDL/CDSL to build the joint operational framework	31 October 2026
Unit-based SWP/STP go live (Phase I)	31 January 2027
Amount-based SWP/STP go live (Phase II)	30 April 2027

So investors holding mutual funds in demat form should expect to register a fixed number of units for withdrawal or transfer first (Phase I), with the more commonly used fixed-amount option arriving a few months later (Phase II).

What to do now

• If you already hold mutual funds outside demat (via AMC or a platform like CAMS/KFintech), your SWP/STP options are unaffected — nothing changes for you.
• If your mutual fund units sit in a demat account and you want an SWP or STP running before January 2027, you’ll still need to either convert the units out of demat or route future investments outside the demat account.
• Track your broker or depository participant’s communication closer to Q4 2026 for the exact process to register standing instructions once the framework goes live.

Source: SEBI circular HO/47/14/13(2)2026-MRD-POD2/I/16590/2026 dated 17 July 2026, as reported by financial media.