Mutual Funds

Fund Basics: Redemption FAQs

| Updated on October 05, 2013

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Funds don't process requests to change bank details that is submitted along with redemption.

Investors may at times find that add-on requests submitted along with redemptions are not processed. We present below some queries received from investors regarding their redemption requests:

I have requested for redemption along with a request for a change in bank details. However, the bank details were not changed and the redemption cheque was sent with old bank details printed therein.

As a risk mitigation measure, Mutual Funds do not process request to change bank details that is submitted along with redemption. Redemption proceeds will be sent to the original bank account or with the original bank details printed in the cheque. Investors who have closed a bank account and are using a new bank should ensure to update the new bank account details in their folios before submitting redemption request.

Mutual Funds now allow individual investors to register up to five bank accounts in their folios. This allows investors to add accounts in their folios and later be able to choose the bank account into which the redemption proceeds can be credited and remove any closed bank account from the folio. This will prevent delays in the receipt of redemption amounts.

I had invested earlier as a minor and am now 18 years old and gave a redemption request, attested by my Bank Manager. However, it was not processed.

Any folio with an investment on behalf of a minor will be locked once he/she attains the age of majority. Transactions are not permitted in such folios till the status of the investor is changed from Minor to “Major”. In fact Mutual Funds send advance intimation to investors informing them to register their new status in the folio. Such investors should register the change in status to “Major”. Once registration is done, investor can freely transact in the folio on their own. Mutual Fund / Registrar websites provide the required form detailing the documents required to effect this change.

I want to receive all future redemptions as a credit into my account directly. What do I do?

Please inform the Fund/Registrar through a written, signed request. In your letter, please mention the IFSC code of your Bank and attach a cancelled cheque leaf reflecting the code. The IFSC Code will be registered in your records and mode of payout changed to electronic.

I have requested a Mutual Fund by letter to “Redeem complete amount and make balance Zero”. The fund has not closed the account and continues to debit the amount of SIP and I am still holding units in spite of asking for a complete redemption.

You seem to be having a running SIP in a scheme. Please note that redemption of all Units and ceasing of SIP are two different processes. If you ask for redemption of all units in a scheme, all the units available on the particular date of the redemption request will be redeemed.

The SIP will however continue even if you have mentioned “Redeem all units” in your letter. To stop the SIP, you would have to give a separate written request duly signed asking the Fund to stop the particular SIP. Ideally such requests should be submitted 3-4 weeks in advance of the next SIP installment.

I have units in my demat account. How can I redeem?

You may place a redemption request with your broker – trading member of the stock exchange and the process would be effected through the stock exchange / depository.

Contributed by CAMS Viveka, an Investor Education Initiative from CAMS. The views expressed herein are general practices in the Mutual Fund industry and may vary on a case to case basis.

Published on October 05, 2013

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