Redeem units without hassle

Investors making redemption requests accompanied with an add-on service, either clarification sought from a minor turned major, or from the holder of a live SIP account need to ensure that they complete specific formalities to ensure their request is processed smoothly. Given below are such queries on redemption received from investors:

I requested for redemption along with a request for a change in bank details. It has taken more than three days to receive the amount.

Most mutual funds now follow a different process for processing of a redemption which is received along with a request for change in bank details. This is in the interest of investor and to prevent incidences of fraud.

Some mutual funds process the request for change in bank details but send the redemption proceeds after a gap of say seven/ten days instead of the usual three days. In the meanwhile, a transaction confirmation email or SMS is sent to investors which will alert them about a transaction in the folio.

Some other mutual funds will not process the request to change bank details along with the redemption and send the proceeds to the original bank account or with the original bank details printed in the cheque.

In an earlier article in this series, we have mentioned that 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. This will prevent delays in the receipt of redemption amounts.

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

Please note that any investment in the name of a minor will be locked once he/she attains the age of majority. Transactions are not permitted in such folios. In fact mutual funds do send advance intimation to investors informing them to register their new status.

Such investors should get the change in status to “Major” registered, after which they can freely transact in the folio on their own.

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 same will be registered in your records and mode of payout changed.

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. It would take about four weeks for auto-debits to stop.

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