According to reports from Mint, placing a mutual fund order today does not guarantee receiving units at today's Net Asset Value (NAV). Under SEBI rules, the applicable NAV depends not only on when the application is submitted but also when the investment amount is credited to the mutual fund scheme's bank account. Cut-off timing refers to the deadline on a business day that determines which day's NAV will apply to a mutual fund purchase or redemption transaction. There are two critical conditions that determine the applicable NAV: the investment application must be submitted before the prescribed cut-off time, and the money must reach the scheme's bank account before the same cut-off time and be available for utilization by the fund house.
As reported by Mint, SEBI has prescribed separate cut-off timings depending on the category of mutual fund. For equity, hybrid, and most debt funds, the cut-off timing is 3:00 PM, while liquid and overnight funds follow different timelines with a 1:30 PM purchase cut-off and 3:00 PM redemption cut-off (extended to 7:00 PM for applications received through online mode). For equity, hybrid, and debt schemes, the closing NAV of the day on which funds become available before 3 PM is applicable. Liquid and overnight funds have an earlier 1:30 PM cut-off for purchases, with purchases after this time receiving the NAV of the next business day.
According to Mint, fund type determines the applicable NAV for sell transactions. Liquid and overnight funds have a 3:00 PM redemption cut-off (extended to 7:00 PM for online mode), while equity, hybrid, and debt funds follow the same 3:00 PM cut-off for requests received on business days. For equity, hybrid, and debt funds, requests received after 3:00 PM or on non-business days receive the NAV of the next business day. The same cut-off timings also apply to switch transactions, where money is transferred from one mutual fund scheme to another within the same AMC.
As reported by Mint, several factors impact NAV determination beyond the cut-off timing. Orders placed on bank or market holidays, or after business hours, are processed on the next working day, and the NAV of that day applies. International mutual fund schemes and transactions executed through recognised stock exchanges follow separate NAV rules and are not covered under this standard cut-off framework. Payment settlement time plays an important role, as different methods like UPI, NEFT, or bank transfers may credit funds at different speeds, sometimes causing NAV to shift. SIPs follow the same NAV rules as lump-sum investments, but delays such as bank holidays, failed mandates, or non-business days can push the transaction to the next eligible NAV date.
