SWP redemption units are calculated using the previous trading day's NAV (T-1). The system determines the number of units to redeem based on this NAV before processing your withdrawal. Here's how it's calculated:
Redemption units = SWP amount ÷ T-1 day's NAV
When you set up a monthly SWP, the system calculates your redemption units using the NAV from the day before your scheduled withdrawal date. However, the actual redemption processes use the current day's NAV (T day).
Example scenario
If you have a monthly SWP of ₹500 scheduled for the 5th of each month:
- The system calculates units using the 4th's NAV (T-1 day)
- If the NAV on the 4th is ₹15: Redemption units = ₹500 ÷ ₹15 = 33.33 units
- You place a redemption order for 33.33 units on the 5th
- The actual redemption processes using the 5th's NAV (T day)
The final amount credited to your bank account may differ from your intended SWP amount because the calculation uses T-1 day's NAV, but the actual redemption uses T day's NAV. You receive more if T day's NAV is higher, and less if T day's NAV is lower.
This difference becomes particularly relevant when you use SWP amounts for STP investments. To avoid failed or delayed transactions, maintain sufficient funds in your bank account.