How to transfer your mutual fund from one demat to another?

Investors choose to transfer their mutual fund units from one demat account to another for various reasons, primarily to enhance their financial management

A mutual fund transfer refers to moving ownership or control of mutual fund units from one demat account to another. This can occur for various reasons, such as consolidating investments, changing brokers, or optimising costs. It is important to note that the transfer process can involve either physical units (Statement of Account) or dematerialised units (demat).

  “Transferring mutual fund units from one demat account to another, whether to your own or someone else’s, can be done efficiently with the right steps in place. The process begins by ensuring that both the transferor and the transferee have active demat accounts. If the units are held in Statement of Account (SoA) form, they need to be converted into demat by filling out a mutual fund dematerialization form,” said Ramneek Ghotra, Chief Growth Officer at Finvasia.

 

“DIS must be submitted to the broker, along with supporting documents, and depending on the value of the transfer, additional steps like video or OTP verification may be required. Upon successful verification, the broker processes the transfer, which can take a few days to several weeks due to delays like mailing the DIS and broker-specific approvals. Fees apply, such as transaction charges and stamp duties, and tax implications may arise for transfers outside of family members,” he said.

 

Key considerations before transferring eligibility 

 

Ensure that the mutual fund units are eligible for transfer. Units under lock-in periods, such as Equity Linked Savings Schemes (ELSS), cannot be transferred until the lock-in period expires. 

 

Documentation: Gather necessary documents including the SoA from your current mutual fund and details of the receiving demat account. 

 

Mode of holding: The mode of holding must remain consistent, if the mutual funds are held jointly in one account, they must also be held jointly in the new account.

 

Central Depository Services Limited (CDSL) offers a streamlined online process for transferring mutual fund units between demat accounts via its ‘Easiest’ platform. Both the transferor and transferee must have access to this platform, and the transferor’s demat account needs to be enabled for online transfers. If not yet registered, the transferor can sign up for the service on the CDSL website, filling out an online form, after which the DP will approve the account for transfers.