How Groww’s Demat Transition Affects Your Mutual Fund Holdings

by Ashok

Posted on July 3, 2025

Groww’s recent demat switch for mutual funds means that, by default, new mutual fund purchases on Groww are now held in your demat account rather than the traditional Statement of Account (SoA) or AMC folio format. Here’s what this change means for your mutual fund (MF) portfolio:

Key Implications of Groww’s Demat Switch:

• How Your Units Are Held:
  • In the demat format, your mutual fund units are stored in your demat account (typically with CDSL), just like stocks and ETFs.
  • In the SoA/AMC folio format, units are held with the Asset Management Company (AMC) and tracked via a folio number.
• Impact on Flexibility and Portability:
  • Demat Format:
    • You must redeem or switch funds through the same broker holding your demat account (in this case, Groww).
    • Transferring mutual funds to another broker is possible but may require additional steps, such as using CDSL’s transfer facility.
    • You can more easily transfer mutual fund units to another person and pledge them for loans.
  • SoA/AMC Folio Format:
    • Greater flexibility to redeem or switch funds via any platform, RTA (like CAMS/KFintech), or directly with the AMC.
    • Easier to track and manage investments across multiple platforms.
• Bank Account and Nominee Management:
  • Demat Format:
    • All mutual funds, stocks, and ETFs are consolidated in one account, simplifying bank account and nominee updates.
    • Updating your bank account or nominee is done centrally for all holdings, rather than for each folio individually.
  • SoA/AMC Folio Format:
    • You must update bank/nominee details separately for each folio, which can be tedious if you have many funds.
• Charges and Fees:
  • Currently, Groww states there are no extra charges for holding mutual funds in demat form.
  • However, demat accounts can have annual maintenance charges (though Groww does not charge these for mutual funds as of now).
  • Some users are concerned that demat-related charges or restrictions could be introduced in the future.
• Redemption Process:
  • With SEBI’s 2024 rule, redemptions must go to the bank account linked to the folio. Demat format helps avoid issues with outdated bank details, as updates are centralized.
• Opting Out:
  • Groww allows you to opt out of the demat format and continue with the traditional AMC folio (SoA) format if you prefer.
  • Existing investments remain in SoA unless you choose to convert them; only new purchases are affected by default.

Advantages of Demat Format:

• Centralized management of all investments.
• Simplified updates for bank and nominee details.
• Easier to pledge units or transfer to another individual.

Drawbacks of Demat Format:

• Less flexibility to switch brokers or redeem via other platforms.
• Potential for future demat-related charges.
• Some features like STP (Systematic Transfer Plan) across funds may not work as easily.

Summary Table: Demat vs. SoA/AMC Folio

What Should You Do?

• If you value centralized management and plan to keep all investments with one broker, demat format may be convenient.
• If you want maximum flexibility to move between platforms or deal directly with AMCs, consider opting out and sticking with the SoA/AMC folio format.

You can opt out of Groww’s demat switch at any time, and your existing investments will not be affected unless you choose to convert them.

Ref: Mutual Fund Investments at Groww Can Also Be Held in Your Demat Account