Can my units bought through MFU account be credited to the Depository (DEMAT) Account?
Yes. You need to register your Depository (DEMAT) Account in CAN. During the transaction, you can request for crediting the units in the Depository (DEMAT) Account. MFU will send the instructions along with the transaction and the AMC/RTA will credit the units to your Depository (DEMAT) Account.
So can I use Zerodha account to hold mutual funds purchased on MFU ?
Yes, Zerodha provides you with the Demat account and you can have your MFU units credited to your Demat by following the above procedure. You can have these units added to your Coin portfolio as well, read more on this link.
Can I redeem them from my Demat account without adding them to Coin ?
Are there some extra charges/fee I need to pay to Stock exchange/zeroda if i keep my MF in Demat format. Someone told me if holding in my Demat account is more than 2L i have to pay some yearly fee to Stock exchange.
You can redeem it only if you add it to Coin, because your order has to be routed through the BSE Star MF platform and redeemed with the respective AMC which is possible only through Coin.
There are no extra charges or fees for holding MF uniits in your Demat account.
They could be referring to the Annual Maintenance Charges(AMC) for the Demat account charged by the broker. The AMC at Zerodha is Rs.300 per year, payable on March 31st on a pro-rata basis. You can also have your Demat converted to a BSDA account where there are no AMC charges if holding value is below 50k. Process and details mentioned here.
Well, if you are planning to invest in Equity and/or buy direct mutual funds on Coin with the click of a button, where you can design your investments exactly to fit your needs, then there is certainly a point in having a Zerodha Demat.
If you want to use the Demat for free just to redeem your MFU units, then I guess there is no point.
You cannot move MF holdings out of Coin and still hold them in Zerodha Demat. Moving MF units out of Coin = moving MF units out of Zerodha Demat.
Also, hypothetically, even if this option were available, Coin charges will still apply if your investment value on Coin exceeds 25k. The only way to stop subscription fees is to redeem all units and stop subscription.