How to Withdraw SIP Amount?

Since the introduction of the Systematic Investment Plan (SIP) concept in mutual funds, approximately 10 crore SIP accounts have been established in India. This totals to a SIP investment of INR 10.90 lakh crore to date. This highlights the popularity of SIP among Indian mutual fund investors.

However, for financial emergencies or other reasons, you must learn how to withdraw SIP amount to get quick access to funds.

A Quick Overview of SIP in Mutual Funds

Before understanding the process for how to withdraw SIP amount, you must understand how SIP works and make the withdrawal decision:

1. When you invest in a mutual fund, you have options like a lump sum investment and a Systematic Investment Plan or SIP.
2. If you choose SIP as your preferred investment mode, you pay a certain amount monthly to your fund. Typically, an SIP starts from as low as INR 500.
3. Your regular contributions in the form of SIP benefit from the power of compounding as potential returns are reinvested. This leads to exponential growth.
4. With an SIP investment, you can reduce the impact from unexpected market movement by pausing your SIP until the market returns to normal.

Process to Withdraw Your SIP Amount Online

You can access your Demat account via your broker’s mobile or web application, or the online portal of your Asset Management Company (AMC):

1. Using the Mobile or Web Portal of Your Broker

   In India, popular banks and more than 4000 brokers provide investment services online, including mutual funds. Popular banks provide mutual fund investment options, too.

   If you are holding a mutual fund with such providers, and want to know how to withdraw SIP amount, follow the steps below using their app:

   Step 1: Log in to their official mobile or web application using your credentials and look for the mutual fund section.

   Step 2: Select your preferred mutual fund whose SIP you want to withdraw. Select whether you want an amount or unit-based withdrawal.

   Step 3: Verify your bank account details and complete other verifications such as OTP, Captcha, etc., and follow the on-screen instructions.

   Step 4: Submit your withdrawal application. Overnight funds take 24 hours to be credited in your bank account, and equity funds take 2-3 working days.

2. Use the App or Web Portal of Your AMC

   If you invest in mutual funds using any of the 44 AMCs in India, you can learn how to withdraw money from SIP online using their web portal or application in 4 simple steps:

   Step 1: Head to the web portal or open the app of your AMC for mutual funds, and log in.

   Step 2: Select the investment section and choose the mutual fund option.

   Step 3: Choose the preferred mutual fund you want to redeem and specify the units or the amount of SIP.

   Step 4: Submit your SIP withdrawal application, confirm using your account password or OTP (as required) to get your SIP amount credited in your bank account.

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Detailed Steps to Withdraw SIP Amount Offline

In case you are unable to withdraw the SIP online for technical reasons or any other issues, you must take note of how to withdraw SIP amount offline:

1. Withdraw From Your AMC Offline

   If your AMC has their physical branches available in your location, visit them during working hours and follow the process below:

   Step 1: At your AMC’s office, ask a representative for a mutual fund redemption form.

   Step 2: Fill out the details such as the name of the fund, the units or SIP amount you want to withdraw, folio, etc.

   Step 3: Attach necessary ID verification details like a copy of your PAN or Aadhaar Card. Sign the form, submit, and get an acknowledgement number.

2. Withdraw Your SIP From Your Fund Distributors

   In India, 12.95 crore folios are held by mutual fund distributors as they guide your mutual fund investment for an optimised return. If you have invested in a mutual fund scheme via such a distributor, and want to know how to withdraw amount from SIP, follow these steps:

   Step 1: Obtain a redemption fund for withdrawing SIP from your fund from your broker.

   Step 2: Fill it out with the necessary information, like the fund’s name, folio number, amounts or number of units you want to withdraw.

   Step 3: Affix ID verification documents and a cancelled cheque of the bank where you want the deposit. Double-check the form, sign it and submit it.

Important Factors to Consider Before Withdrawing SIP Amount

Now that you know how to withdraw SIP amount both offline and online, you must consider some crucial factors, as they might increase your overall expenses:

1. To encourage long-term investing, typically closed-ended mutual funds have a 3-year lock-in period. Check if your fund is closed-ended. If it is, you cannot proceed with SIP withdrawal.
2. If your mutual fund is open-ended, you can withdraw the SIP at your convenience. Many open-ended funds apply a 1% exit load if you withdraw funds within 12 months.
3. You must consider the tax implications of your withdrawal. In India, STCG and LTCG taxes apply depending on your investment tenure and fund type.

Conclusion

If you want to redeem your mutual fund investments, you must learn how to withdraw SIP amount in detail. You can withdraw your SIPs both online and offline. However, you must be cautious of the lock-in period and costs such as exit load and tax implications.

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Frequently Asked Questions

1. Can I withdraw SIP anytime?

Yes, for open-ended funds, you can withdraw anytime, paying the applicable exit loads. For closed-ended funds, you can withdraw SIP anytime after the lock-in period.

2. Is there any penalty for withdrawing SIP early?

There is no specific penalty amount applicable for withdrawing SIPs early. However, an exit load applies, which varies between funds, if you withdraw before a certain time.

3. How long does it take to get SIP withdrawal money?

Overnight funds get credited to your account within 24 hours. Debt funds settle in 1 day, and equity funds settle within working days after the transaction.