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SEBI Revises Mutual Fund Cut-off Timings

24 May 2022

As per a circular dated September 17, 2020,  that  Securities and Exchange Board of India (SEBI) had said that mutual fund units will be allotted at the NAV applicable on the day of realization of funds. 

Here, ‘realisation of funds’ means that the NAV applicable on your transaction will depend on if the fund house has received your money or not.

While this was to be implemented from January 1, 2021, in circular SEBI/HO/IMD/DF2/CIR/P/2020/253 dated December 31, 2020, Sebi had said that the implementation was being pushed by a month.

This will now be applicable from February 1, 2021.

Read more on Groww: Mutual Fund Buying Rules Changed – Same Day NAV Applicable

Cut-Off Timings on Groww and NAV Applicability

When the investment amount is available to withdraw in Groww balance

Liquid/Overnight Funds: You will get previous day’s NAV if the transaction is done before cut-off timing
All other funds: You will same day’s NAV if transaction is done before cut-off timing.

When the investment amount is not available to withdraw in Groww balance

Relevant cut-off timings and NAV applicability is mentioned in the table below. Have a look at this illustration below for better clarity:

The applicable NAV for transactions under mutual fund schemes is determined as follows:

Purchase orders

Type of fund Order placement on Groww (cut off) Payment receipt on Groww (cut off) NAV applicability
Liquid / Overnight 12:00 noon 12:00 noon Previous day
Liquid / Overnight After 12.00 noon  After 12.00 noon NAV of the day immediately preceding the next business day
All other funds 2:00 pm 2:00 pm Same-day
All other funds After 2.00 pm After 2.00 pm Next business day

Note

  • Orders placed on Saturdays, Sundays, and other market/public holidays will be treated as orders placed on the next business day.
  • Payments through Groww balance usually result in same-day NAV if you place the order before cut-off time. Note that if you’re paying via Groww Balance, you can only use the amount available to withdraw and not the amount available to invest.
  • Payments via UPI transfers may take upto 2hrs for the amount to reach Groww
  • Payments via netbanking may take upto 6hrs for the amount to reach Groww.
  • In some cases, when you might make the purchase before the cut-off time, but funds are not received before the cut-off time, your order is placed on the next business day. Accordingly, you get the next business day NAV.

Redeem orders and SWP Orders

The cut-off time for placing redeem orders is 3pm. Placing your redeem order before the cut-off time means you’ll get: 

  • NAV of the day immediately preceeding the next business day in case of liquid / overnight funds
  • NAV of the same day in case of other funds

Switch and STP Orders

Switch and STP orders are a combination of purchase & redeem orders. Groww’s cut-off time for switch-out orders is 3 PM, and switch-in orders are processed only after the switch-out leg is settled. So, NAV for switch-in orders is determined only after the switch-out order is processed.

What is ‘Available to Withdraw’?

It is the amount you can withdraw from Groww Balance to your bank account.

When will my balance be available to withdraw:

  • When you add money using UPI: Same day, before 6 pm and after 6 pm next working day
  • When you add money using Net-Banking: After 1 working day
  • MF Redemptions: immediately on money being settled in Groww Balance on completion of redemption
  • Stock Sell: After two working days
Redemption
Scheme Type Groww Cut-off Time
Liquid and Overnight Funds 3:00 PM
Debt/Conservative Hybrid Fund other than Liquid and Overnight funds 3:00 PM
All other schemes other than those mentioned above 3:00 PM

What Will Change for My SIP Orders?

There are primarily two ways to pay for a SIP instalment: AutoPay and BSE Mandates. Here’s how the NAV and order completion dates will change after February 1, 2021:

AutoPay:

For investors with SIP on AutoPay, there will be no change in the applicable NAV date and order completion of your SIP orders.

BSE Mandates:

For investors with BSE mandates (Biller and One-time mandates), until now BSE was deducting the SIP instalment amount from your bank account directly on the SIP due date and the order completion was happening on T+1 day.

Due to the same-day NAV change implemented from February 1, 2021, the instalment amount will be deducted on T day by BSE and fund realization at BSE end is T+ 2/3  business days and the expected completion date for these orders will change from T+1 business days to T+ 4/5  business days from BSE end.

Hence, the order completion date and NAV date is pushed for all BSE mandates( Biller and One-time mandates).

AutoPay BSE Biller mandate BSE One-time mandate
Previously Expected NAV date T T T
Expected order completion date T+2 T+2 T+2
Now Expected fund realization date T (No change) T+3 T
Expected NAV date T (No change) T+4/5 T
Expected order completion date T+2 (No change) T+5/6 T+2

Note:
• T is the transaction/due date for your SIP instalment.

  • All the dates mentioned are working days. Any holiday/weekend in between will result in the extension of this date.
  • These are only tentative dates by BSE and are subject to change.

How to find out whether my mandate is a BSE mandate( Biller and One-time mandate) or Autopay?

Here are a few steps to know which mandate you have:

  • Go to the Profile section on the app
  • Find the ‘My Account’ section
  • Select Bank and Autopay
  • You will see your verified bank account on the next page. Click on the bank.
  • On the next screen, you will be able to see your account details and the mandate you have.

They will show up as follows:

Autopay Mandates

  • Autopay via OTP
  • Autopay via Form 

BSE Mandates

  • AutoPay via Biller
  • AutoPay via One-time mandate

What are Cut-Off Timings in Mutual Funds?

Many investors get confused between trading hours and cut-off timings. While trading hours are the allotted periods for buying or selling mutual fund units, cut-off timings determine the Net Asset Value (NAV) at which you can buy or sell mutual fund units. Cut-off timings are different for different types of funds.

For all funds except liquid funds, if you buy/invest in a mutual fund before the cut-off timing, you can receive the NAV of the same day. 

In September, Sebi had added another clause. To get the same day’s NAV, your money should reach the AMC on the same day too. In case you made a transaction before the cut-off timing and due to some reason the money did not reach the fund house, you may get the next day’s NAV.

Happy Investing!

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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