SEBI’s Mutual Fund Cut-off Timings Explained

Think of cut-off timings as deadlines. They determine which day's NAV your mutual fund transaction will get. It's not just about when you place your order, but also when your money reaches the fund house. To get a specific day's NAV, your order AND your payment must be processed before the cut-off time on that day.

Let's break down these key changes and how they affect your investments, focusing on payment methods and fund types.

How Payment Mode Affects Your NAV

The cut-off time for your mutual fund order isn't just about when you place it; it also depends on how you pay. The crucial point is that your NAV is determined by when the fund house successfully processes your payment.

Here’s a breakdown:

• UPI (Unified Payments Interface): Generally, if your UPI transaction is successful before the specified cut-off time, you are eligible for the same-day NAV.
• Net Banking:
  • Select Banks: If you use Net Banking from specific major banks (e.g., Axis Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, SBI Bank), you can qualify for same-day NAV, provided the payment is processed before the cut-off.
  • Other Banks: For payments made via Net Banking from banks not on the "select" list, the NAV will typically be applied as of the next business day (T+1), regardless of when the order was placed. These banks are also called nodal banks.

Cut-off Times Based on Fund Types

The type of fund you're investing in also plays a big role in determining the cut-off time and the applicable NAV.

For Purchase Orders

Important Considerations:

• Weekend & Holidays: Orders placed on Saturdays, Sundays, or other market holidays will be processed on the next business day.
• Payment Delays: If you place an order before the cut-off but your funds don't reach the fund house in time, you might receive the next business day's NAV.

How These Cut-off Timings Impact Your Investments

Understanding these timings helps you make smarter investment decisions:

• Liquid Funds: If you're investing in a Liquid Fund, make sure to place your order before 12:30 PM if you want your transaction to be processed at the same-day NAV. This is especially important if you're making time-sensitive investments.
• For Equity and Debt Funds: Place your order and ensure payment receipt by 2:00 PM to receive the same-day NAV. Orders received after this time will get the next business day's NAV (T+1).
• Net Banking: Always use one of the select banks (Axis, ICICI, HDFC, Kotak Mahindra, SBI) for net banking payments if you want same-day NAV; otherwise, you will receive the NAV of T+1 business days. These selected banks are nodal banks, which we discussed earlier.

Redemption of Orders

The cut-off time for placing redemption orders is 3:00 PM.

• Liquid/Overnight Funds: If you redeem before 3:00 PM, the same day's NAV will apply. If you redeem after 3:00 PM, the next business day's NAV will apply.
• Other Funds: If you redeem before 3:00 PM, you'll get the NAV of the same day.

Mandatory OTP: Remember, OTP verification is now required for all redeem orders. Your order won't be processed until the OTP is verified, and your NAV will depend on when this verification occurs.

Switch and STP Orders

Switch and STP orders involve both a redemption and a purchase.

• The cut-off time for switch-out orders is 3:00 PM.
• Switch-in orders are processed only after the switch-out is settled. This means the NAV for your switch-in order is determined after the switch-out is complete.

Mandatory OTP: Just like redemption, OTP verification is mandatory for switch/STP orders. Your order won't proceed without it, and the NAV will depend on the verification time.

Final Words:

Ultimately, navigating SEBI's mutual fund cut-off timings boils down to timing and precision. By understanding the specific deadlines for different fund types and payment methods, you can ensure your transactions are processed with the correct day's NAV. Always aim to complete your orders and payments well in advance of the cut-off times, and remember that timely OTP verification is critical for redemptions and switches. This knowledge empowers you to make more strategic and effective mutual fund investment decisions.

Disclaimer: The content is meant for education and general information purposes only.  Past performance is not indicative of future returns. Mutual Funds are non-exchange traded products, and INDstocks is merely acting as a mutual fund distributor. All disputes with respect to distribution activity, would not have access to the exchange investor redressal forum or arbitration mechanism. Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing. INDstocks Private Limited (formerly known as INDmoney Private Limited) 616, Level 6, Suncity Success Tower, Sector 65, Gurugram, 122005, SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), AMFI Registration No: ARN-254564, SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.