Mutual fund redemption refers to selling your mutual fund units. The process of mutual fund redemption is quick and simple, making mutual funds a very liquid investment. This is another reason why mutual fund investments are lucrative. You can redeem mutual fund when you are not happy with the performance of a fund or when you need some money.
In this article we will take a look at how to redeem mutual funds. The mutual fund redemption process can be online or offline. How to redeem mutual fund will depend on where you have purchased it from.
Directly from the AMC: In case you have purchased the mutual fund directly from the AMC, there are a couple of ways to redeem it. If you have the log-in and password to sign in to the portal of the AMC, then you need to log into an account and place a request for the number of units you want to redeem. Often your folio number or your PAN number may be your login id. AMC portals will give you can option to redeem all your mutual fund units as long as they are not within a lock-in period.
The other way is to visit the office of the AMC and submit a duly filled up redemption form. To redeem mutual fund offline you need to fill up a redemption form with your name, folio number, scheme name with details of the plan and the number of units you want to redeem. If you do not have a bank account registered with the AMC or want the money in some other account, you need to also mention your bank account number where you want to receive the money and other details like the IFSC code. Remember that during the offline mutual fund redemption process you need to be very careful to fill in the correct details in the form and also put a proper signature. If these details do not match the form is likely to get rejected and it would lead to unnecessary delays in the redemption process.
In both cases when the request is processed the amount is transferred to your account through NEFT or RTGS. In case you do not have a registered bank account number, you may also want to receive the payment by cheque. The time taken to redeem mutual funds usually depends on the type of fund it is. For liquid funds redemption happens in one business day after the redemption process is initiated. For debt fund the time taken is two business days and for equity fund it is three business days. The online process takes a day or two less because the application for redemption is processed instantly.
If you have bought the mutual fund through a distributor or agent: If you have brought the mutual funds through a distributor or agent, mutual fund redemption can happen through the same agent. As earlier, you need to fill up a redemption form with details like the name of the plan, your folio number and number of units you wish to withdraw. Ask your agent for guidance on how to fill up the form if you have any doubts. The agent will submit the form at the office. Once the redemption is processed and the redemption initiated, the proceeds will get credited to your account if you wish to receive it in a bank account or a cheque will be mailed to you. Total time taken would be 2-5 business days.
If you have purchased the mutual fund through a transfer agency: You may have bought several mutual funds from a transfer agency like Karvy, you need to fill up the redemption form with required details and submit it to their nearest office. You will also have an option to redeem mutual funds online through their website.
If you hold your mutual funds in a demat account: If you are holding mutual funds through your demat account and the broking platform allows online redemption of mutual fund units, then you can do it online. If there is no online option available, ask your broker to do it on your behalf.
If you have purchased mutual funds from an online site or app: Many people buy mutual funds form online portals or app. These portals or apps sell mutual funds from different fund houses. The mutual fund redemption process on these apps and sites is simple. Once you are logged in to your account, you can choose the fund, the number of units you want to redeem and initiate the redemption process.
Once you know how to redeem mutual funds, mutual fund redemption is a simple process. However before redemption, take note of any charges or tax you might have to incur.