There are two types of rebalancing on Niyo Money- SIP rebalancing and Portfolio rebalancing.
SIP rebalancing helps you with updating the funds in your ongoing monthly SIP, so that future investment starts going into the new funds. You are changing the future instructions. There is no money movement involved in this rebalancing. When you rebalance your SIPs, the already invested amount stays invested and continue to grow. It'll be rebalanced later when it becomes free of exit load charges (Portfolio Rebalancing).
Portfolio rebalancing moves the already invested money out of the old funds and into the new funds. We ensure here that only equity investment that has crossed 1 year is rebalanced, to avoid exit load and short term capital gains tax. We also make sure the current asset allocation (split between equity and debt) matches the recommended allocation as per the goal settings.
You can read more about the process of portfolio rebalancing here.