How to Redeem Mutual Fund Units: Complete Process

Investing in mutual funds is only half the story — knowing how to redeem your mutual fund units when you need the money is equally important. Whether you are withdrawing for an emergency, fulfilling a financial goal, or simply rebalancing your portfolio, this guide covers the complete process of redeeming mutual fund units in India.

What Does Redeeming Mutual Fund Units Mean?

Redemption simply means selling your mutual fund units back to the fund house. When you redeem, the fund house buys back your units at the current NAV (Net Asset Value) and credits the proceeds to your registered bank account.

You can redeem all your units (full redemption) or only a portion (partial redemption). You can also specify a redemption by amount (e.g., ₹50,000) or by units (e.g., 500 units).

Before You Redeem: Things to Check

Before initiating a redemption, consider these factors:

• Exit load: Some funds charge an exit load (typically 1%) if you redeem within a specified period, usually 1 year for equity funds. Check your fund’s exit load policy.
• Lock-in period: ELSS funds have a mandatory 3-year lock-in. You cannot redeem before the lock-in expires.
• Tax implications: Short-term capital gains (equity funds held less than 1 year) are taxed at 20%. Long-term capital gains above ₹1.25 lakh are taxed at 12.5%.
• Is this the right time? If you do not urgently need the money, staying invested longer usually yields better results.

How to Redeem Mutual Fund Units Online

Method 1: Through Your Investment App

If you invested through an app like Bachatt, redemption is straightforward:

1. Open the app and go to your portfolio
2. Select the fund you want to redeem
3. Tap on “Redeem” or “Withdraw”
4. Choose full or partial redemption
5. Enter the amount or number of units
6. Confirm the transaction with your PIN or OTP

Method 2: Through the AMC Website

1. Log in to the respective AMC’s website (e.g., SBI MF, HDFC MF)
2. Go to your holdings or transaction section
3. Select the scheme and click “Redeem”
4. Enter the amount or units and confirm

Method 3: Through MF Central

MF Central (mfcentral.com) is a SEBI-regulated platform where you can redeem units from any fund house in one place.

How Long Does It Take to Get the Money?

The redemption timeline depends on the type of fund:

• Liquid funds: T+1 day (you get the money the next business day)
• Debt funds: T+1 to T+2 days
• Equity funds: T+2 to T+3 days
• ELSS and hybrid funds: T+2 to T+3 days

The money is credited directly to the bank account registered with your folio. You cannot redirect it to a different account.

NAV Applicable on Redemption

The NAV you receive depends on when you place your redemption request:

• Equity/hybrid funds: If the request is placed before 3:00 PM on a business day, you get that day’s NAV. After 3:00 PM, you get the next business day’s NAV.
• Debt/liquid funds: Same cut-off of 3:00 PM applies, but additional conditions on fund realization may apply.

Partial Redemption vs Full Redemption

Partial redemption lets you withdraw only what you need while keeping the rest invested. This is a smart approach because:

• Your remaining investment continues to grow
• You avoid unnecessary tax on the full amount
• You maintain your investment discipline

Full redemption closes your holding in that particular fund. If you had a SIP running, remember to stop the SIP separately — redeeming units does not automatically cancel your SIP.

Systematic Withdrawal Plan (SWP): An Alternative

If you need regular income from your mutual fund investment, consider a Systematic Withdrawal Plan instead of one-time redemption. An SWP lets you withdraw a fixed amount every month while keeping the rest invested. It is the reverse of a SIP and is tax-efficient because only the gains portion of each withdrawal is taxed.

Common Mistakes When Redeeming

• Panic selling during market drops: Markets recover over time. Do not redeem equity funds during temporary corrections.
• Forgetting to cancel SIP: If you fully redeem a fund, remember to also cancel the associated SIP.
• Ignoring tax impact: Plan your redemptions to minimize tax — for example, spread across financial years to stay within the ₹1.25 lakh LTCG exemption.

Redeem with Ease on Bachatt

The Bachatt app makes mutual fund redemptions quick and hassle-free. View your holdings, check exit loads and tax implications, and redeem in just a few taps. Your money reaches your bank account within the standard settlement period.

Download the Bachatt app to manage your mutual fund investments — from SIP to redemption — all in one place.