Things to know about redeeming demat units

Mutual fund investors have the option of holding their units in the demat form. This can be achieved by indicating this option and quoting the demat details in the application form. However, such investors cannot carry out transactions with respect to the units directly with the mutual fund. These transactions, including redemption requests, have to be routed either through the stock broker or through the depository participant (DP). There are different procedures to effect redemptions using these routes.

Redemption through DP

Investors can fill in the completed redemption form and submit it to their DP, who will send it to the registrar and get the redemption proceeds credited to the account of the investor.

Redemption via the broker

If the broker provides an online platform for transactions in securities, the investor can execute redemptions by placing an instruction for the units online. Once confirmed, the units will be redeemed and the proceeds will be credited to the investor’s bank account.

Physical request

The investor can place an order for redemption with the broker and submit a delivery instruction slip (DIS) to transfer the mutual fund units to the designated CM Pool account of the scheme through the usual settlement process. The redemption proceeds will be credited to the investors’ bank account.

Points to note

The redemption form/DIS has to be signed by all the unit holders of the folio, irrespective of the mode of operation of the folio.

Investors can also make an application for re-materialisation of the dematerialised units if they want to transact directly with the mutual fund.

(The content is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava)