How to redeem mutual funds online and what are the steps involved?

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mutual funds

Investing in mutual funds can be a great way to grow your money over time and get exposure to different asset classes, including stocks, bonds, and gold. However, there may come a time when you need or want to access that money. It can be due to an emergency, a planned expense, underperformance of the fund, or you just want to enjoy the profit. When that time comes, you will want to know how to redeem your mutual fund units.

Depending on the types of mutual funds you have invested in, there may be a slightly different process for redeeming your units. However, the entire process is generally quick and straightforward. Today, most Asset Management Companies (AMC) allow instant mutual fund redemption through their online portal or through your demat account. Here are the steps to redeem mutual funds online through both these ways.

Understanding mutual funds redemption

Mutual fund redemption is the process of selling units of a fund and withdrawing money from your investment. When you redeem mutual fund units, you are selling them back to the fund company at the current market value to receive your returns.

Steps to redeem mutual funds through the AMC’s portal

  • Log in to the online portal of your selected AMC
  • Navigate to the ‘online transaction’ page
  • Enter your details, such as your PAN or folio number
  • Select your mutual fund investment scheme and the number of units you wish to redeem. Alternatively, you can also enter the amount of money you wish to redeem.
  • Confirm your transaction. Now you may receive a one-time password (OTP) on your registered mobile number/email ID. Enter that OTP online to process the transaction.
  • Post confirmation, the amount will be credited to your linked bank account. Depending on the funds and fund house, it can take one to five working days. In the case of a liquid fund, the amount can be credited in one or two working days after the redemption.

You can also redeem mutual funds units offline by visiting the AMC office or the office of service providers such as CAMS or KFintech. Simply obtain the form through the office and initiate the redemption request. Once your request is processed, you will get an acknowledgement through SMS or email the next day, after which the amount will be credited to your bank account.

Mutual funds redemption through trading or demat account

Most people also invest in mutual funds online through a demat account. If you also bought mutual funds through your demat account, then you can redeem your units through the same account.

  • Simply log in to your account and apply for redemption of funds.
  • Now choose the number of units you want to sell.
  • When the process is complete, an e-payout (electronic payout) is made against the redemption request, after which you will receive the funds in your bank account.

Closing thoughts

Choosing the right time to redeem your mutual funds is an important decision that can have a big impact on your financial future. So, it must be taken only after extensive research and careful consideration. Depending on the fund, it can take one to five working days for the pay out to get credited to your bank account. So, if you need funds for a specific purpose, it is advisable to plan ahead. Also, your redemption proceeds can be subject to an exit load (depending on the type of scheme and investment tenure).