Definition of Redemption
In mutual funds, redemption is the process of selling your mutual fund units back to the AMC and receiving the equivalent cash into your bank account. The amount you receive is based on the applicable NAV on the day of redemption (or next business day for equity funds).
Equity mutual fund redemptions are processed at the end-of-day NAV of the day the request is placed (if placed before the 3 PM cut-off; otherwise the next day's NAV applies). The money typically reaches your bank account within 2–3 working days (T+2 for equity, T+1 for debt funds).
Things to keep in mind before redeeming: check if the holding period qualifies for LTCG (1 year for equity), calculate any exit load charges, and consider whether a partial redemption or SWP (Systematic Withdrawal Plan) is more tax-efficient than a full redemption if you're using the investment for regular income.