NISM-Series-V-A: Mutual Fund Distributors · Investor Services

SIP, SWP, STP and Other Investor Services Explained

Updated 11 October 2026 · Fact-checked

SIP invests a fixed amount at regular intervals into a scheme. SWP withdraws a fixed amount at regular intervals from a scheme. STP moves a fixed amount at regular intervals from one scheme to another of the same fund house. Facilities like NACH mandates and account statements support these services.

Understand SIP, SWP, STP and Other Investor Services

Mutual funds offer more than a one-time purchase. They offer systematic plans, which are standing instructions that run on their own at fixed intervals. There are three: SIP for investing, SWP for withdrawing, and STP for switching.

A Systematic Investment Plan (SIP) lets an investor put in a fixed sum at regular intervals, such as monthly or quarterly, into a chosen scheme. Each instalment buys units at the NAV applicable on that date. When NAV is low, the same amount buys more units. When NAV is high, it buys fewer. Over time this averages the purchase cost. This is called rupee cost averaging. It does not guarantee profit and does not protect against loss in a falling market.

A Systematic Withdrawal Plan (SWP) works the other way. The investor already holds units and asks the fund to redeem a fixed amount, or a fixed number of units, at regular intervals. Money reaches the investor's bank account like a regular income. Each withdrawal is a redemption, so exit load and tax rules can apply to it. A Systematic Transfer Plan (STP) moves a fixed amount at regular intervals from one scheme to another scheme, usually of the same fund house. It is often used to move money from a liquid or debt scheme into an equity scheme in stages. The transfer is a redemption from the source scheme and a purchase in the target scheme, so load and tax can apply on the source side.

Several services support these plans. A NACH mandate is an instruction given by the investor to their bank, allowing automatic debit of the SIP amount on the due date. It is run through the National Automated Clearing House and is the common way to collect SIP instalments. The investor signs it once and the debit repeats until it is cancelled or expires.

Investors also receive account statements. A Consolidated Account Statement (CAS) shows all mutual fund holdings of an investor across fund houses, linked by PAN. Investors can also transact online through the AMC website, apps, registrar platforms and exchange platforms, and units can be held in demat form with a depository participant as an option to a statement of account. Check current SEBI and AMFI circulars for exact timelines of statement dispatch, because these are updated from time to time.

Key formulas to remember

SIP: Fixed amount × fixed interval → units bought = amount ÷ NAV on that date; Lower NAV gives more units. Average cost per unit = total invested ÷ total units.
Average cost per unit: Total amount invested ÷ Total units purchased; This is not the simple average of the NAVs when the amount is fixed. It is lower than the simple average of NAVs (harmonic mean effect).
SWP: Units redeemed = withdrawal amount ÷ NAV on that date; Each withdrawal is a redemption. Exit load and capital gains tax can apply.
STP: Redemption from source scheme + purchase in target scheme; Fixed, flexible or capital appreciation variants exist. Load and tax apply on the source scheme redemption.
NACH mandate: One-time signed bank instruction → repeat auto-debit on due dates; Used for SIP collection. The investor can cancel or modify it through the bank or AMC.
CAS: One statement per PAN across all fund houses; Consolidates folios across AMCs. Do not confuse it with the single-AMC account statement.

How to solve SIP, SWP, STP and Other Investor Services questions

Most questions on this topic ask you to identify the right facility or to compute units or average cost. Use this method.

1Read the direction of money. Into a scheme from the bank means SIP. Out of a scheme to the bank means SWP. From one scheme to another means STP.
2Check whether the question is about a plan or a supporting service such as NACH, CAS or demat.
3For a numerical question, write the amount and each NAV, then compute units = amount ÷ NAV for each date.
4Add the units and the amount, then find average cost = total amount ÷ total units.
5For SWP or STP, remember that every withdrawal or transfer is a redemption, so check load and tax in the options.
6Remove options that use absolute words such as guarantees profit or removes all risk.
7Pick the option that matches the exact definition and recheck the arithmetic.

Quickest way: Direction-of-money check

When to use it: Use it for any definition or which-plan question where options are close.

Ask: where does the money start and where does it end?
Bank to scheme is SIP. Scheme to bank is SWP. Scheme to scheme is STP.
For units questions, divide amount by NAV and add up. Do not average the NAVs.
Reject any option promising guaranteed returns or loss protection.

Common mistakes in SIP, SWP, STP and Other Investor Services

Mixing up SWP and STP.
Both are systematic redemptions from a scheme, and the names look alike.
Fix: SWP pays out to the investor's bank. STP moves money into another scheme.
Believing SIP guarantees profit or avoids loss.
Rupee cost averaging is often described as a safety feature.
Fix: It only averages the purchase cost. Returns still depend on the market and the scheme.
Computing average cost as the simple average of NAVs.
It is a quick shortcut and looks reasonable.
Fix: Use total amount ÷ total units. With equal amounts the result is lower than the simple average of NAVs.
Thinking SWP and STP have no tax or load impact.
No cash is received in an STP, so it feels like no sale.
Fix: Both are redemptions from the source scheme, so exit load and capital gains tax can apply.
Confusing a NACH mandate with the SIP itself.
Both are set up together at registration.
Fix: The SIP is the investment instruction to the fund. NACH is the bank authority that allows the debit.
Treating CAS as a statement from one AMC only.
Investors also get account statements directly from each AMC.
Fix: CAS is PAN-based and covers holdings across fund houses. An AMC statement covers only that AMC's folios.

Worked examples

Example 1

An investor invests ₹5,000 every month through a SIP. The NAVs on the three dates are ₹10, ₹8 and ₹10. What is the average cost per unit?

Show the solution

Units in month 1 = 5,000 ÷ 10 = 500.
Units in month 2 = 5,000 ÷ 8 = 625.
Units in month 3 = 5,000 ÷ 10 = 500.
Total units = 500 + 625 + 500 = 1,625.
Total invested = 3 × 5,000 = ₹15,000.
Average cost = 15,000 ÷ 1,625 = ₹9.23 (approx).

Answer: ₹9.23 per unit (approx), which is below the simple average NAV of ₹9.33.

Example 2

Which facility should an investor use to move ₹20,000 every month from a liquid scheme into an equity scheme of the same fund house?

Show the solution

Check the direction: money moves from one scheme to another.
It does not come from the bank, so it is not a SIP.
It does not go to the bank, so it is not an SWP.
A scheme-to-scheme transfer at fixed intervals is an STP.
Note that the monthly transfer is a redemption from the liquid scheme, so load and tax may apply there.

Answer: Systematic Transfer Plan (STP).

Exam tips

Questions often give a one-line scenario and ask which plan fits. Use the direction-of-money check.
Expect at least one arithmetic question on units or average cost. Always use total amount ÷ total units.
Watch for trap options that say guaranteed returns, assured profit or no risk.
Learn what NACH and CAS each do and who issues them, as the options are usually close.
V-A has no negative marking, so attempt every question and never leave one blank.

Practice questions from Investor Services

SIP, SWP, STP and Other Investor Services in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA FinalSIP, SWP, STP and Scheme Comparisons

SIP, SWP, STP and Other Investor Services: frequently asked questions

What is the difference between SIP, SWP and STP?

SIP puts a fixed amount from your bank into a scheme at regular intervals. SWP takes a fixed amount out of a scheme to your bank at regular intervals. STP moves a fixed amount from one scheme to another.

How does a SIP work in mutual funds?

On each due date a fixed amount is debited from your bank and invested at that day's applicable NAV. You get units equal to amount ÷ NAV. Over time, the purchase cost gets averaged.

What is a NACH mandate for SIP?

It is a one-time instruction to your bank to allow automatic debit of your SIP amount on each due date. It runs through the National Automated Clearing House. You can cancel it through your bank or the AMC.

What is a mutual fund Consolidated Account Statement (CAS)?

A CAS shows all your mutual fund holdings across fund houses, linked to your PAN. It saves you from tracking separate statements for each AMC.

Do SWP and STP attract tax?

Yes, they can. Each withdrawal or transfer is a redemption from the source scheme, so exit load and capital gains tax rules apply to it.