Mutual Fund Cut-Off Times for NAV Allocation

What Is NAV and Why Does the Cut-Off Time Matter?

Before diving into the mechanics of cut-off times, it is worth grounding ourselves in what a Net Asset Value actually represents. The NAV of a mutual fund scheme is the per-unit market value of all the assets held by that scheme, net of liabilities. It is calculated at the end of each business day after the markets close - typically after the NSE and BSE have published their closing prices - and is declared by the Asset Management Company (AMC) for each of its schemes.

Because NAV is calculated only once per day, mutual funds are not like stocks where you can buy or sell at any price throughout the trading session. Instead, all transactions received within a certain window are clubbed together and processed at a single NAV for that day. This is fundamentally different from trading shares on the NSE or BSE, where prices change every second.

The cut-off time, therefore, is the dividing line that determines which day's NAV you receive. Submit your request - along with realised funds - before the cut-off, and you get today's NAV. Miss it by even a few minutes, and your transaction is pushed to the next business day, meaning you receive tomorrow's NAV, which could be higher or lower depending on how the underlying securities move.

For equity funds, where NAV can swing by one to three percent or more in a single session, missing the cut-off on a day when markets fall sharply could mean buying units at a lower price than you would have otherwise, which in that specific scenario is actually beneficial for purchases. Conversely, missing the cut-off on a rising day means you pay more for the same units. For redemptions, the reverse logic applies - a falling NAV the next day reduces the proceeds you receive.

For liquid funds and overnight funds, where investors often park short-term cash, the stakes are different but equally important. These funds are used for cash management, and even a single day's difference in NAV can affect returns when large sums of money are involved - particularly for corporate treasuries and high-net-worth investors.

The SEBI-mandated cut-off time system also prevents a practice known as late trading, which was a serious concern in international markets. Without strict cut-off rules, an investor could theoretically place an order after seeing the day's market movements but still receive the current day's NAV - an obvious and unfair advantage. The Indian regulatory framework, overseen by SEBI, has been structured to prevent exactly this kind of arbitrage.

Regulatory Framework: SEBI's Role in Prescribing Cut-Off Times

SEBI is the primary regulator of mutual funds in India, operating under the SEBI (Mutual Funds) Regulations, 1996, which have been amended numerous times to keep pace with market developments. Cut-off times are prescribed through SEBI circulars, the most recent and significant of which was issued in September 2020 and came into effect on 1 February 2021.

Prior to the February 2021 circular, the rule for most non-liquid schemes was that an investor only needed to submit the purchase application before the cut-off time to receive that day's NAV - the actual fund transfer could happen later. This created a situation where large investors, particularly institutional ones, could leverage intra-day market movements and then transfer funds at their convenience while still securing a favourable NAV.

The revised circular fundamentally changed this by introducing the realised funds requirement. Under the new rules, for purchase transactions in all mutual fund schemes (including equity, debt, hybrid, and fund of funds), both the application and the realised payment must reach the AMC before the applicable cut-off time for the investor to receive that day's NAV. This aligns the Indian framework more closely with best practices in mature markets.

AMCs are required to prominently display cut-off times on their websites and in the Scheme Information Document (SID) and Key Information Memorandum (KIM) of each scheme. SEBI also mandates that AMCs must process transactions on a timely basis and that any delay must be justifiable and disclosed. Registrar and Transfer Agents (RTAs) - the back-office entities like CAMS and KFintech that process transactions on behalf of multiple AMCs - must also comply with these timelines.

Investors should note that while SEBI sets the outer framework, individual AMCs may, in some cases, have operational policies that are more conservative. For instance, an AMC may instruct its platforms to stop accepting online orders a few minutes before the official cut-off to allow for processing time. Always check the specific AMC's website or the relevant investment platform for the exact operational timeline they follow.

Non-compliance with NAV allocation rules is taken seriously by SEBI. AMCs that incorrectly allocate NAVs - whether by processing late transactions at an earlier NAV or vice versa - face regulatory scrutiny and potential penalties. This enforcement backdrop means that fund houses and their distributors maintain strict internal controls around cut-off time compliance.

For investors using third-party platforms - whether BSE Star MF, NSE Mutual Fund Platform (NMF II), or fintech aggregators - the order must typically reach the exchange or RTA before the cut-off. Each intermediary in the chain may have its own internal deadline that is earlier than the official SEBI cut-off, to give themselves time to relay the transaction. This is a crucial practical point that many investors miss.

Cut-Off Times for Different Fund Categories

SEBI has established different cut-off times for different categories of mutual fund schemes, reflecting the nature of the underlying assets and the operational requirements of those categories. Understanding the category-wise differences is essential for any investor.

Equity Funds, Debt Funds (Non-Liquid), Hybrid Funds, and Fund of Funds: For purchase transactions in these categories, the cut-off time is 3:00 PM IST on any business day. If both the application and the realised funds reach the AMC before 3:00 PM, the investor receives the NAV of that same business day. If either the application or the funds arrive after 3:00 PM, the transaction is processed at the NAV of the next business day.

For redemption transactions in these categories, the cut-off time is similarly 3:00 PM IST. A redemption request received before 3:00 PM will be processed at the closing NAV of that business day, and the proceeds will typically be paid out within three business days (T+3) for equity funds, though many AMCs process it sooner. For debt funds, redemption proceeds are usually paid on the next business day (T+1) or even the same day for certain categories, subject to the cut-off being met.

Liquid Funds and Overnight Funds: These categories operate under a different, more stringent set of cut-off rules. For purchase transactions, the cut-off time is 1:30 PM IST. However, there is an additional condition: the amount must be ₹2 lakh or less for the 1:30 PM cut-off to apply with same-day NAV. If the transaction amount exceeds ₹2 lakh, the funds must be realised in the AMC's account by 1:30 PM to get the NAV of the day immediately preceding the date of allotment (known as the previous day's closing NAV). This is a nuanced rule that often confuses investors.

For redemption of liquid fund units, the cut-off time is 3:00 PM IST, and the proceeds are typically paid out the next business day (T+1). Some AMCs offer instant redemption facilities for liquid funds, subject to SEBI's limits (currently up to ₹50,000 or 90% of the investment, whichever is lower), which operate outside the standard cut-off framework using the AMC's own funds.

Switch Transactions: A switch involves simultaneously redeeming from one scheme and purchasing units in another. The cut-off rules for the redemption leg and the purchase leg apply independently. Since the purchase is funded by the redemption proceeds, the timing of when those proceeds are credited to the AMC's account matters for determining the NAV of the destination scheme.

Systematic Investment Plans (SIPs), Systematic Withdrawal Plans (SWPs), and Systematic Transfer Plans (STPs): These automated transactions are governed by the dates and cut-off rules agreed upon at the time of registration. SIP debits typically happen early in the morning on the selected date, and the funds are generally considered realised by the cut-off time, though investors should confirm this with their AMC or platform. For STPs, both the redemption and purchase legs must satisfy their respective cut-off requirements.

The Realised Funds Rule: A Deep Dive

The February 2021 amendment introducing the realised funds requirement deserves careful attention, as it represents the most significant change to the cut-off time framework in recent years and continues to have practical implications for investors.

The term 'realised funds' refers to money that has actually been credited to the AMC's designated bank account and is available for use. This is distinct from a payment instruction being issued or a cheque being deposited. In an era of electronic payments, the distinction between instruction and realisation has narrowed significantly, but it still exists and matters.

For investors paying via NEFT or RTGS, funds are typically credited within two hours of the payment instruction, subject to the originating bank's processing times and RBI's NEFT settlement cycles. NEFT operates on a near-continuous basis on all working days, with multiple settlement cycles throughout the day. RTGS, which handles transactions above ₹2 lakh, generally provides real-time gross settlement, meaning funds are credited almost immediately during banking hours.

For investors using the IMPS (Immediate Payment Service) facility, transfers are processed in real time and are available 24x7, making it the preferred method for last-minute transactions. However, investors should note that even if the payment is made through IMPS, the AMC must receive and confirm the realisation before the cut-off for the NAV rule to apply. Each AMC has its own back-office systems for confirming fund receipt, and there can be a lag of a few minutes.

Cheque payments present a more complex scenario. A cheque deposited in a drop box or handed over to a distributor must be physically presented to the bank and cleared before the funds are considered realised. This can take one to two business days under standard clearing, or it can be faster with local clearing. In practice, investors making large purchases via cheque should account for a day or two of additional processing time. For time-sensitive transactions, electronic payment modes are strongly preferable.

For investments through the BSE Star MF or NSE NMF II platforms, the mandate debit (where the investor's bank account is debited via NACH or UPI) is processed by the platform, and the funds flow to the AMC. The exact timing of when these funds are considered realised can vary. Most platforms provide clarity on their cut-off times - which may be 15 to 30 minutes earlier than the official SEBI cut-off to account for processing - and investors should check this carefully.

Automatic debit via NACH (National Automated Clearing House) mandates - commonly used for SIPs - follows a specific settlement cycle operated by NPCI. For SIPs registered on NACH, the debit typically occurs on the SIP date and is settled the same day or the next, depending on the cycle. AMCs treat these as realised funds once confirmed by NPCI, and the applicable NAV is determined accordingly.

An important safeguard for investors: if you are unsure whether your funds have been realised before the cut-off, you can check the transaction status on the AMC's portal or through the platform you used. Most AMCs provide transaction confirmation messages that specify the NAV date applied, which you can verify against your records.

Impact of Cut-Off Times on Different Investor Scenarios

The practical impact of cut-off times varies considerably depending on the investor's profile, the size of the transaction, and the investment objective. Examining several common scenarios helps illustrate why this knowledge is actionable.

Scenario 1 - The Salaried Investor Making a Lump Sum Investment: A salaried professional receives salary credit on the last working day of the month and wants to immediately invest a lump sum in an equity fund. If the salary is credited after 3:00 PM, initiating the transfer on the same day means the funds will not be considered realised before the cut-off. The NAV received will be of the next business day. If the next day happens to be a market holiday, the applicable NAV will be of the business day following that. Planning the investment instruction a day in advance - or choosing a payment mode like IMPS that can effect real-time transfer - helps avoid this delay.

Scenario 2 - The Retiree Using SWP: A retiree has set up a Systematic Withdrawal Plan from a balanced advantage fund to receive monthly income. The SWP is scheduled for the 5th of each month. The AMC processes the redemption on the 5th, applying the NAV of that day if the internal processing occurs before the cut-off. In most cases, automated SWP transactions are designed to comply with the cut-off, but the retiree should verify this at the time of registration and periodically thereafter.

Scenario 3 - The Corporate Treasury Investing Surplus in Liquid Funds: A company's finance team has ₹50 lakh to park in a liquid fund for five days. Given the amount exceeds ₹2 lakh, the funds must reach the AMC by 1:30 PM to get the previous day's NAV - and hence start earning returns from the day of investment. If the transfer happens at 2:00 PM, the investment will be processed at the current day's NAV, effectively losing one day of return on a ₹50 lakh corpus. At even a modest return of 6.5% per annum, one day's return on ₹50 lakh is approximately ₹892 - not trivial for a treasury operation.

Scenario 4 - The Investor Redeeming for an Emergency: An investor needs to withdraw money urgently from a debt fund. Placing the redemption request before 3:00 PM means the proceeds will be calculated at that day's closing NAV, with payout typically the next business day. Placing it after 3:00 PM means the NAV of the next business day applies, potentially pushing actual payout by an additional day. For genuine emergencies, investors should also explore the instant redemption feature available in liquid funds, which allows immediate payout up to SEBI's prescribed limit without waiting for the standard settlement cycle.

Scenario 5 - The Investor Switching Between Schemes: An investor wants to switch from a large-cap equity fund to a hybrid fund. The switch involves two legs. The redemption from the large-cap fund is processed at the NAV of the business day when the switch request is received before 3:00 PM. The proceeds then flow back to the AMC, and the purchase in the hybrid fund is executed at the NAV of the day when those proceeds are treated as realised. Depending on the AMC's internal processes, both legs may be effected on the same day or there may be a one-day lag between redemption and purchase NAVs.

Scenario 6 - Transactions on Days Preceding Market Holidays: If a transaction is placed on the business day before a market holiday, the cut-off rules still apply in the same way. However, the next NAV declaration will only happen on the next business day after the holiday. Investors should be especially mindful of this around long holiday weekends - such as Diwali or Holi - when multiple trading holidays can occur in succession, causing NAV applicability to shift by several days.

Common Mistakes Investors Make Regarding Cut-Off Times

Despite the availability of information, cut-off time errors are among the most common operational mistakes made by retail investors in India. Recognising these pitfalls helps you avoid them.

Mistake 1 - Confusing Order Submission Time with Fund Realisation Time: Many investors believe that as long as they click the 'buy' button on their app before 3:00 PM, they will receive that day's NAV. This was partially true under the old regime but is no longer sufficient post the February 2021 amendment. The payment must also be realised in the AMC's account before the cut-off. If your bank transfer takes 30 minutes to process and you initiate it at 2:50 PM, the funds may not be realised by 3:00 PM. The safe practice is to initiate transactions well before the cut-off - ideally by 2:30 PM or earlier for large transactions.

Mistake 2 - Not Accounting for Platform-Level Cut-Offs: Third-party platforms - whether BSE Star MF, NSE NMF II, or app-based aggregators - often have internal cut-off times that are 15 to 30 minutes earlier than the official SEBI cut-off. This buffer exists to allow the platform to relay the transaction to the AMC or RTA before the official deadline. Investors who use these platforms and wait until 2:55 PM to place an order may find that the platform has already closed order acceptance for that day.

Mistake 3 - Ignoring the Special Rule for Liquid Funds Above ₹2 Lakh: Many investors are unaware of the distinction for liquid fund purchases above ₹2 lakh. Investing ₹5 lakh in a liquid fund with a transfer completed at 2:00 PM means the purchase will be processed at the NAV of the current day, but the units will be allotted at the previous day's NAV. This is not incorrect - it is how the regulation works - but investors sometimes misunderstand their account statement and think there has been an error.

Mistake 4 - Assuming Holidays Have No Impact: Investors sometimes forget that NAV is not declared on days when NSE and BSE are closed. If a transaction is submitted on a holiday, it will be processed at the NAV of the next business day. Similarly, transactions placed after the cut-off on the day before a holiday will be processed at the NAV of the next business day after the holiday. During a long holiday weekend, this can mean a transaction placed on Thursday afternoon is not processed until the following Tuesday.

Mistake 5 - Miscalculating Redemption Payout Dates: Investors who need funds for specific financial obligations - EMI payments, insurance premiums, school fee deadlines - sometimes fail to account for both the cut-off time and the settlement period. A redemption placed after 3:00 PM on a Monday in an equity fund will use Tuesday's NAV, and payout will typically arrive by Thursday. If the investor needed the money by Wednesday, they have created an avoidable problem.

Mistake 6 - Relying on Verbal or Chat Confirmations Alone: Some investors make transactions through agents or distributors and trust verbal confirmations of the time the order was placed. Always insist on a written confirmation - an email, SMS, or transaction receipt - that shows the timestamp of order receipt by the AMC or RTA. This documentation is invaluable if there is ever a dispute about which NAV should have been applied.

Mistake 7 - Not Checking for Force Majeure or System Outages: Occasionally, technical issues at the AMC, RTA, or payment gateway can delay the processing of transactions. SEBI has provisions for such circumstances, and AMCs are required to document and disclose any such events. If you suspect your transaction has been affected by a system outage, contact the AMC's customer service promptly and escalate through SEBI's SCORES portal if needed.

Cut-Off Times for SIP, SWP, and STP Transactions

Systematic transactions - SIPs, SWPs, and STPs - are the backbone of disciplined investing for millions of Indian retail investors. Understanding how cut-off times interact with these automated plans is important for setting accurate expectations.

Systematic Investment Plans (SIPs): When you register an SIP, you specify a date each month on which units will be purchased. On that date, the NACH mandate is executed, debiting your bank account. The AMC receives confirmation from NPCI regarding the debit, and the funds are credited to the scheme. In most cases, for SIPs processed via NACH, the realisation of funds happens during the morning settlement, and the applicable NAV is that of the SIP date. However, if the SIP date falls on a holiday, the transaction is processed on the next business day at that day's NAV.

For SIPs registered with a minimum amount of ₹100 per month (following SEBI's microSIP framework), the same cut-off logic applies, though the small transaction sizes rarely create complications with the realised funds rule.

An important nuance: if your bank account has insufficient funds on the SIP date and the NACH debit fails, most AMCs will not automatically retry on the same day. The SIP instalment for that month is simply skipped. Multiple consecutive SIP failures can lead to the SIP being marked as inactive by the AMC, requiring reregistration. There is no regulatory provision that allows for a retroactive SIP purchase at an earlier date's NAV to compensate for a missed instalment.

Systematic Withdrawal Plans (SWPs): SWP transactions are redemptions on a specified date each month. The AMC processes the redemption at the NAV of the SWP date (subject to it being a business day) and transfers the proceeds to the investor's registered bank account. Since SWPs are AMC-initiated rather than investor-initiated on the date, they are typically set up to comply with the cut-off time automatically. The investor's primary concern is ensuring the SWP amount and date are correctly set at registration.

One common SWP planning mistake: investors sometimes set an SWP date that is the same day as a financial obligation (say, an EMI debit on the 5th). If the SWP processes at the NAV of the 5th but the proceeds only arrive in the bank account on the 6th (T+1 for debt funds) or the 7th (T+2 for equity funds), the bank account may not have sufficient balance for the EMI on the 5th. Setting the SWP date two to three days before the obligation is a practical workaround.

Systematic Transfer Plans (STPs): STPs involve a redemption from one scheme (the source) and a simultaneous purchase in another scheme (the target). Each leg is subject to the cut-off times of its respective category. For an STP within the same AMC - which is the most common setup - the redemption proceeds from the source scheme are used to fund the purchase in the target scheme. The NAV for each leg is determined by when each transaction is processed.

If the source and target schemes belong to different fund categories - for instance, liquid to equity - the cut-off times for each category apply to the respective leg. The investor should confirm with the AMC how the two legs are linked and whether there is any risk of the purchase leg's funds not being realised in time for the cut-off of the target scheme.

For investors using STPs as a strategy to gradually deploy a lump sum from a liquid fund into an equity fund - a popular approach to reduce market timing risk - understanding the STP cut-off interaction is part of effective planning.

Cut-Off Times and Tax Implications

The NAV at which your units are allotted or redeemed is not just an investment consideration - it also has tax consequences, particularly when it comes to holding period calculations for capital gains tax purposes.

In India, mutual fund capital gains are taxed based on the holding period of the units. For equity-oriented funds, units held for more than one year are subject to Long-Term Capital Gains (LTCG) tax, while units held for one year or less attract Short-Term Capital Gains (STCG) tax. For debt-oriented funds (other than specified debt funds), the applicable provisions may differ - investors should refer to the latest Finance Act and consult a tax advisor for current rates and rules, as these are subject to change with each Union Budget.

The holding period of mutual fund units is calculated from the date of allotment - the date on which units are formally credited to your folio - not the date on which you placed the order or made the payment. This date of allotment is directly tied to the NAV date, which in turn is determined by the cut-off time rule.

Consider a scenario where you place a purchase order at 3:15 PM on 30 March, missing the cut-off for that day. The units are allotted at the NAV of 31 March. Your holding period therefore begins on 31 March. If you redeem those units on 30 March the following year, only 364 days will have elapsed since allotment, falling just short of the one-year threshold for LTCG treatment in equity funds. The missing of the cut-off by 15 minutes has pushed the holding period start date by one day, potentially affecting the tax classification of your gains - from LTCG to STCG.

While this example is extreme, it illustrates that cut-off times have regulatory and tax-related consequences beyond just NAV arithmetic. Investors planning their tax-loss harvesting, ELSS lock-in periods, or long-term holding strategies should account for the allotment date (not the order date) in all their calculations.

For ELSS (Equity Linked Savings Schemes) specifically, the three-year lock-in period begins from the date of allotment of units. A missed cut-off on the last day of the financial year (31 March) means units are allotted on 1 April, which falls in the next financial year. This could affect both the lock-in start date and the financial year to which the Section 80C deduction applies. Investors making last-minute ELSS investments near the financial year-end must be especially careful about the cut-off time.

Similarly, for the purpose of the financial year in which an investment counts towards your Section 80C limit, the applicable financial year is determined by the allotment date, not the payment date. An ELSS payment made on 31 March after the cut-off - resulting in allotment on 1 April - would count toward the next financial year's Section 80C limit, not the current one. This is a significant tax planning error that many investors make in the last-minute rush at financial year-end.

Checking and Confirming NAV Applicability

Given the operational complexity around cut-off times, knowing how to verify that the correct NAV has been applied to your transaction is an important skill for any mutual fund investor.

Transaction Confirmation Statement: Every mutual fund transaction generates a confirmation document - sometimes called an account statement or transaction confirmation slip - which is sent to the investor's registered email address, typically within 24 to 48 hours of the transaction. This statement shows the date of the transaction, the NAV applied, the number of units allotted or redeemed, and the folio number. Investors should make it a habit to check this statement against their expectations.

AMC Online Portal and Mobile Apps: Most AMCs provide real-time transaction tracking through their websites and mobile applications. Once your transaction is processed, you can log in and view the status, including the NAV date applied. Discrepancies can be flagged immediately through the AMC's customer service channels.

RTA Portals: If your investments are consolidated across multiple AMCs through a single RTA (such as CAMS or KFintech), you can log in to the RTA's investor portal using your PAN and email to view all your transactions and the NAV applied to each. These portals also allow you to download Consolidated Account Statements (CAS), which serve as a comprehensive record.

Dispute Resolution: If you believe the wrong NAV has been applied to your transaction - for instance, you have evidence that the funds were realised before the cut-off but the AMC has applied the next day's NAV - you should first raise a formal complaint with the AMC's investor relations or grievance redressal team. AMCs are required by SEBI to address investor complaints within a specified timeframe. If the AMC's response is unsatisfactory, you can escalate the matter to SEBI's SCORES (SEBI Complaint Redress System) portal, which is available at scores.sebi.gov.in.

Proactive Documentation: The best way to avoid disputes is to maintain your own records. Keep screenshots or PDFs of: the time you placed the order on the platform, the payment confirmation from your bank, and the transaction acknowledgement from the AMC or platform. If you are investing through a distributor or financial advisor, ask for a written acknowledgement of the order placement time.

Annual Portfolio Review: As part of your annual financial review, reconcile your mutual fund folios by downloading a full Consolidated Account Statement from CAMS or KFintech. This statement shows the complete transaction history - purchase dates, NAVs, units allotted - across all your AMC investments linked to your PAN. It is an excellent tool for both tax planning and verifying historical NAV applicability.

Practical Tips to Ensure Correct NAV Allocation

Armed with a thorough understanding of how cut-off times work, there are several practical strategies you can adopt to ensure you consistently receive the NAV you intend.

Tip 1 - Transact Early in the Day: The simplest and most effective strategy is to place your transaction well before the cut-off time. For equity, debt, and hybrid funds, placing your order and initiating the payment by 1:00 PM to 2:00 PM gives ample time for funds to be realised before the 3:00 PM cut-off. For liquid fund investments above ₹2 lakh, aim for completion by 12:30 PM to be safe against the 1:30 PM cut-off.

Tip 2 - Use Real-Time Payment Modes: Opt for IMPS or RTGS for large transactions, as these offer near-instant fund transfer. Avoid relying on NEFT for last-minute transactions, especially in the afternoon, as settlement cycles may not align with your cut-off window. Never use cheques or demand drafts for time-sensitive investments.

Tip 3 - Know Your Platform's Cut-Off: If you invest through a fintech app, broker platform, or MFD (Mutual Fund Distributor), find out their internal cut-off time for forwarding orders to the AMC or RTA. This information is usually available in the platform's help section or FAQs. Treat this as your effective cut-off, not the official SEBI time.

Tip 4 - Set Up SIPs for Early-Month Dates: If you wish to use a specific date for NAV purposes - for example, investing when you receive your monthly salary - setting your SIP on the 3rd or 4th of the month (rather than the 28th or 29th) gives more buffer time and avoids complications at month-end when bank systems are often under higher load.

Tip 5 - Plan ELSS Investments Well Ahead of 31 March: Do not wait until the last working day of March to make your ELSS investments. Invest at least a week before 31 March to eliminate any risk of missing the cut-off and having the investment counted in the next financial year. If investing through SIP, start the SIP early in the financial year rather than a one-time investment in March.

Tip 6 - Keep a Calendar of Market Holidays: NSE and BSE publish their holiday calendars at the beginning of each year. Download and save this calendar. Mark critical dates - especially consecutive holidays - and plan your transactions accordingly. Transactions on pre-holiday days should be completed even earlier than usual.

Tip 7 - Register for Instant Redemption in Liquid Funds: If you use liquid funds for emergency reserves, explore whether your AMC offers an instant redemption facility (subject to SEBI's prescribed limit). This gives you access to funds immediately when needed, bypassing the standard T+1 settlement cycle. However, note that this facility is available only up to SEBI's prescribed per-transaction and per-day limits.

Tip 8 - Review STP and SWP Dates Periodically: If you have running STPs or SWPs, periodically review the transaction records to confirm that the correct NAVs are being applied. If you notice any anomaly, contact the AMC promptly. Also, if your STP or SWP date falls on a holiday in a given month, confirm how the AMC handles the rescheduling - different AMCs have slightly different policies for the next business day processing.

Example

Key benefits

How it works

1. 1
   Investor Places Transaction Request

   The investor submits a purchase, redemption, or switch request either directly through the AMC's portal, via an RTA platform, or through a registered intermediary or aggregator platform before the applicable cut-off time.

2. 2
   Payment is Initiated and Realised

   For purchase transactions, the investor initiates payment via NEFT, RTGS, IMPS, or NACH mandate. The funds must be credited to and confirmed in the AMC's designated bank account before the cut-off time - not just initiated.

3. 3
   AMC or RTA Stamps the Transaction

   The AMC or its Registrar and Transfer Agent (such as CAMS or KFintech) records the transaction with a timestamp. If both the request and realised funds arrive before the cut-off, the transaction is tagged for that day's NAV.

4. 4
   NAV is Calculated After Market Close

   After the NSE and BSE close for the day, the AMC calculates the NAV of each scheme based on the closing prices of the underlying securities, net of expenses. This NAV is declared and published by the AMC.

5. 5
   Units are Allotted or Redeemed at Declared NAV

   For purchase transactions, units are allotted to the investor's folio at the applicable NAV. For redemptions, the amount payable is calculated based on the applicable NAV and the number of units redeemed.

6. 6
   Confirmation is Sent to Investor

   The AMC or RTA sends a transaction confirmation to the investor's registered email and/or mobile number, showing the NAV date applied, number of units allotted or redeemed, and the resulting folio balance.

7. 7
   Proceeds Settled as Per Category Rules

   For redemptions, payout is made to the investor's registered bank account within the prescribed settlement period - typically T+1 for liquid funds, T+2 or T+3 for equity funds - subject to the cut-off having been met.

Formula

Applicable NAV Date = Date on which BOTH the transaction request AND realised funds reach the AMC before the prescribed cut-off time (3:00 PM for equity/debt/hybrid; 1:30 PM for liquid/overnight funds).
Units Allotted (Purchase) = Transaction Amount ÷ Applicable NAV.

Key takeaways

Frequently asked questions

Related terms