In its latest circular, the Securities and exchange board of India (Sebi) extended the facility of creating standing instructions with the registrar and transfer agent (RTA) or the fund house for STP and SWP transactions.
This will allow the investors holding their mutual fund units in demat form to create standing instructions for periodic redemption of specified number of mutual fund units or amount through Systematic Withdrawal Plan (SWP) or transfer of investments from one mutual fund scheme to another scheme of the same fund house by redemption from one scheme and subscription to the other scheme through Systematic Transfer Plan (STP).
Until now, the facility of creating standing instructions was only available for mutual fund units held in physical form by the investors. The regulator specified that the facility will be implemented in two phases.
The first phase will make the facility available for unit-based SWPs and STPs where standing instructions are based on withdrawal or transfer of a specified number of mutual fund units. The second phase will extend the facility to amount-based SWPs and STPs where standing instructions are based on withdrawal or transfer of a specified amount.
The regulator specified that these provisions will come into effect immediately.