Switch, STP & SWP
"How do I switch from one fund to another?" / "What is STP?" / "Can I withdraw money every month?" / "What does SWP mean?"
âī¸ Background (agent reference â do not read to customer)
Three related but distinct flows for moving money around within mutual-fund holdings.
- Switch â move money from one scheme to another within the same AMC in a single operation. One-time.
- STP (Systematic Transfer Plan) â a periodic Switch. Move a fixed amount every month from Scheme A to Scheme B inside the same AMC. Used to move gradually from a debt fund into equity.
- SWP (Systematic Withdrawal Plan) â a periodic redemption. Take a fixed amount out of a fund every month to the customer's bank.
All three are reached from Portfolio â Holding detail â More Actions. The backend uses TransactionType.Switch_in / Switch_out for Switch and STP, and TransactionType.Redemption for SWP.
- Switch â moves money between two funds of the same fund house in one go. From the holding, tap More Actions â Switch, pick the destination scheme, and enter the amount.
- STP â does the same thing as Switch, but monthly for a fixed period. Useful when the customer has a large lump-sum in a debt fund and wants to move it gradually into equity.
- SWP â takes money out of a fund and into the customer's bank every month. Useful for retirement income.
- Switch and STP do not need a mandate â they happen inside the fund house's books. SWP also does not need a mandate â money goes to the bank registered with that folio.
- Tax â Switch and STP each count as a sell on the source + buy on the destination, so capital-gains tax applies. SWP is a sell, so capital-gains tax applies to the withdrawn amount.
Escalate to L2 if: Switch / STP / SWP setup fails repeatedly, the customer wants to switch across AMCs (not supported â they have to redeem and re-buy), or an STP/SWP installment is missed.
Switch
| Detail | Value |
|---|---|
| Where it starts | Holding detail â More Actions â Switch |
| Constraint | Source and destination must be schemes from the same AMC |
| Minimum | The destination scheme's minimum lump-sum amount |
| Exit load | If the source has an exit-load window still running, it applies |
| Tax | Yes â counts as a sell (capital gains apply) on the source + buy on the destination |
| Time | Same business day if before cut-off; next business day otherwise |
Status path: TransactionType.Switch_out (source) + Switch_in (destination) â MFOrderState.Pending â Confirmed â Submitted â Successful.
STP (Systematic Transfer Plan)
| Detail | Value |
|---|---|
| Where it starts | Holding detail â More Actions â STP |
| Frequency | Monthly (Weekly / Quarterly are AMC-dependent) |
| Source and destination | Same AMC only |
| Duration | Number of installments â typically 6, 12, 24 months |
| Mandate needed | No â funds move inside the AMC's books |
| Exit load | Each transfer counts as a sell on the source â exit-load may apply on each |
| Tax | Each STP installment is a taxable sell on the source |
Example: Customer parks âš5 L in a liquid fund, sets up an STP of âš50,000 / month into an equity fund for 10 months. Reduces market-timing risk on the equity side.
SWP (Systematic Withdrawal Plan)
| Detail | Value |
|---|---|
| Where it starts | Holding detail â More Actions â SWP |
| Frequency | Monthly |
| Destination | The bank account linked to the folio |
| Duration | Until cancelled, or fixed number of installments |
| Mandate needed | No â it is a redemption, no debit happens |
| Exit load | Applies on each instalment if within exit-load window |
| Tax | Each SWP installment is a taxable sell â capital-gains tax applies |
| Settlement | T+1 to T+3 business days per installment |
Example: Retired customer with âš50 L in a balanced fund sets up an SWP of âš30,000 / month for living expenses.
What the customer sees
For all three flows the holding-detail page shows:
| State | What it looks like |
|---|---|
| Switch / STP / SWP not set up | More Actions menu shows the three options as taps |
| Active STP / SWP | A small chip below the holding header: "STP active â next on 8 Aug" / "SWP active â next on 8 Aug" |
| Each installment | Appears in Transaction History as a separate row (Switch_in / Switch_out / Redemption) |
Failure modes â what to tell the customer
| Failure | What to say |
|---|---|
| Switch fails immediately | The destination scheme is closed for purchase. Pick another scheme in the same AMC. |
| STP installment missed | Source ran out of units or the AMC paused the scheme. Check the source balance â STP needs at least one installment's worth of NAV-value in the source. |
| SWP installment missed | The folio ran out of units, or the bank account on file is invalid. Refresh the folio from Portfolio. |
| Customer says "I switched but lost money" | Switching crystallises gain/loss on the source â explain that the destination is also moving and the realised number can look red until the destination grows. |
A customer who wants to move money from an ICICI fund to an HDFC fund cannot use Switch â those are two different AMCs. They must redeem from ICICI (money goes to bank, T+1 to T+3) and then buy HDFC as a fresh lump-sum. Two taxable events, two transaction windows.
Always suggest Switch when the customer is staying in the same AMC. It is faster (no bank round-trip) and avoids the T+1-to-T+3 cash gap. Suggest Redeem-and-buy only when crossing AMCs.
Customers often think STP is "moving my own money around" and forget that every STP installment is a taxable sell. If they ran an STP every month for 12 months from a debt fund into an equity fund, that is 12 capital-gains events to declare in their ITR. Mention this once before they set it up.