How to redeem units from mutual funds?

A common worry for the first-time investors is the complex process for redeeming the units of a mutual fund. While liquid or low duration fund are redeemed within one working day, equity funds might take 2-3 business working days for redemption.

Redemption is the process of withdrawing the units from the mutual fund, and getting back the money invested with returns, if any, in your savings account. The net asset value will be considered on the day of redemption. You can redeem the units online or offline. Through online, you have to visit the mutual fund website whereas offline process involves visiting the branch and submitting the redemption form.

Here’s all you need to know to redeem your units post achievement of the financial goal:

One of the primary benefits of investing in a mutual fund is the easy saving and redemption process. Generally, the redemption proceeds take 3-4 working business days to reflect in your savings account. Also, the time depends upon the redemption of a particular mutual fund. Today, some of the mutual fund AMCs provide instant redemption of funds in the liquid or low duration category and is credited via IMPS into your bank account. However, there is a cap of INR 50,000 or 90% of our holdings in the mutual fund, whichever is lower. For equity mutual funds, the process might take 3-4 working days.

Ways of making redemption

You can redeem the units online and offline too. To redeem offline, you have fill all the details including your folio no., scheme name, account no, bank details to the mutual fund distributor. Alternatively, you can submit the details directly at the mutual fund office.

The offline process is a bit complex whereas redeeming the mutual fund via online process is a much easier process. All you need to do is fill your details and press the redemption button, and confirm the transaction. The requisite amount will be credited within the said time. You can also visit the respective mutual fund website and learn the redemption process.

Applicable charges

In many cases, there is no exit load applied to a mutual fund, but if the units are redeemed within the year, there is short-term capital gain tax applicable and will be deducted from the final amount to be credited in the bank account. At the same time, liquid fund or ultra-short term fund do not contain the exit load, therefore, no exit load will be deducted from the NAV, which is applied for your redemption.

Last, but not the least – Congratulations for completing your financial goals, and invest regularly!