Markets regulator SEBI has simplified the transfer of mutual fund units by allowing such transfers in non-demat mode.
With this, investors can now avail multiple options — without the hassle of opening a demat account.
Why Investors Transfer Mutual Fund Units
There are many situations where investors may wish to transfer mutual fund units.
Upon the demise of a unitholder, the surviving joint holder may want to add a new joint holder, which is now possible.
At times, the nominee of a deceased unitholder may wish to transfer the units to other legal heirs, something that was earlier not allowed.
With SEBI now permitting transfers, once the units are transmitted in the name of the nominee, they can be further transferred to other entitled beneficiaries.
How Can These Transfers Be Done?
Transfers can be initiated only through the websites of registrars and transfer agents (RTAs) such as CAMS, KFintech, or MF Central.
The transferors must log in using their PAN, select the scheme from which they wish to transfer units, and fill in the transferee’s details.
The consent of all unitholders is required — obtained through a one-time password (OTP) sent via mobile and email.
The transferee must be KYC-compliant and have a folio with the same fund house. Once these prerequisites are met, the transfer can be initiated seamlessly.
Who Can Avail of This Facility?
All mutual-fund schemes across fund houses will offer this transfer facility, except ETFs and solution-oriented schemes such as children’s funds and retirement funds that have age-based eligibility criteria.
All resident and non-resident individual unitholders holding mutual-fund units in Statement-of-Account (SoA) mode are eligible to initiate a transfer.
However, transfers involving minor folios or vice versa are not allowed.
Also, transfers from a resident Indian to a non-resident Indian (NRI) account are prohibited.
Prerequisites for Availing the Facility
The units should not be under lien, freeze, or lock-in.
Both the transferor and transferee must have valid folios in the same mutual fund.
If not, the transferee must open a ‘zero-balance folio’ before initiating the transfer.
Both parties must have valid KYC status to proceed.
Can the Transferee Redeem Units Immediately After Transfer?
No. Redemption of transferred units will not be allowed for 10 days from the date of transfer — a safeguard to ensure compliance and process integrity.
For deeper insights on mutual-fund regulations and how these changes empower investors, explore perspectives from Ranjit Jha (CEO) who frequently explains regulatory shifts shaping investor convenience and trust.
If you wish to understand how to optimise your mutual-fund holdings or navigate new SEBI frameworks, connect with Rurash Financials — your partner for investments, funding, and wealth management.