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Redemption in mutual funds means selling your units at the current NAV to withdraw money when needed.
Submit a redemption request with the amount or units.
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One of the major advantages of investing in mutual funds is their excellent liquidity, which allows investors to easily convert their units into cash when required. Since mutual funds are overseen by the Securities and Exchange Board of India (SEBI), specific rules are in place to ensure this liquidity. Most mutual funds belong to open-ended schemes, which are designed to offer investors flexible entry and exit options. Liquidity simply means how quickly and effortlessly an investment can be converted into cash. Once a redemption request is submitted, the proceeds are typically transferred to the investor’s registered bank account within three working days.
What Does Mutual Fund Redemption Mean?
Redemption in mutual funds refers to the process of withdrawing your money by selling the units you hold in a scheme at the prevailing Net Asset Value (NAV). It gives investors the flexibility to access their funds when needed, particularly during financial emergencies. By redeeming your mutual fund units, you are liquidating part or all of your investment and receiving its current value.
Ways to Withdraw from Mutual Funds
Withdrawing from mutual funds is simple, and you can choose from several convenient methods:
Via Broker or Distributor
If your investment was made through a broker or distributor, you can request a withdrawal through them. This can be done by filling out a physical redemption form (for offline requests) or using their website/app (for online requests). Simply select the scheme and specify the units or amount you want to redeem.
Through DEMAT or Trading Account
If your mutual fund units are linked to your DEMAT and trading account, you can redeem them via the same platform. Log in, select the mutual fund, enter the desired units or amount and confirm the transaction. The redeemed amount is credited to your linked bank account.
Directly Through the AMC
You can approach the Asset Management Company (AMC) directly, either online through their website/app or offline by visiting their branch. After logging in, choose the scheme, specify the units/amount to redeem and submit your request.
Via Registrar and Transfer Agents (RTA)
Service providers like CAMS and KFintech offer redemption facilities. You can submit a request online via their portals or visit their service centres to process an offline request.
Steps for Withdrawing Mutual Funds Online
To redeem mutual fund units online:
Visit the fund house’s official website or the third-party platform through which you invested.
Navigate to the “Online Transactions” section.
Enter your folio number and PAN to log in.
Select the scheme and specify how many units or the amount you wish to redeem.
Review and confirm the transaction.
Withdrawal Process Summary
Here’s how mutual fund withdrawal typically works:
Submit Request:
Place a redemption request online, via a mobile app, or in person at a branch. Provide details of the number of units to be withdrawn.
Verification:
The fund house will verify your holdings and check for any conditions like lock-in periods or exit loads.
Processing:
The redemption is processed within a few working days, depending on the AMC and scheme type.
Tax Considerations:
Withdrawals are subject to capital gains tax, depending on how long you held the investment (short-term or long-term) and the type of fund (equity or debt).
Payment:
The redeemed amount is transferred directly to your registered bank account. The time for the funds to reflect may vary slightly based on the AMC and your bank.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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