What is the meaning of IDCW in mutual funds?

IDCW means Income Distribution *** Capital Withdrawal option'. The dividend payout option in mutual funds has been rechristened to IDCW by the SEBI. In addition, the market regulator has also renamed the dividend reinvestment option as the reinvestment of income distribution *** capital withdrawal option and the dividend transfer plan to the transfer of income distribution *** capital withdrawal plan.

Sharing the rationale, SEBI said that there is a need to clearly communicate to the investor that a certain portion of his capital (equalization reserve or distributable reserve) can be distributed as a dividend under such option of a mutual fund scheme. These changes came into effect on 1st April 2021.