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Securities and Exchange Board of India (Sebi) has restored the NAV cut-off timings for equity mutual funds.

The revised cut-off timings that will be applicable from Monday on Groww ( effective Oct 19, 2020) are as follows:

Purchase TransactionsGroww-Specific  BSE Cut-Off Timings
Scheme Type
Liquid and overnight funds11:55 AM
Debt/Conservative Hybrid fund other than Liquid and overnight funds >= 2L12:25 PM
All other schemes other than those mentioned above  >= 2L2:25 PM
Debt/Conservative Hybrid fund other than Liquid and overnight funds < 2L1:00 PM
All other schemes other than those mentioned above < 2L3:00 PM
Redemption
Scheme TypeGroww BSE Cut-Off
Liquid and overnight1:00 PM
Debt/Conservative Hybrid fund other than Liquid and overnight funds1:00 PM
All other schemes other than those mentioned above3:00 PM

These timings are specific to Groww. These were changed Sebi issued a communication to all mutual fund companies for changing the NAV cut-off timings.

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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. Based on the cut-off timing, you can receive the NAV of the current day, the previous day, or the next day.

According to the latest revision, if you are buying units of a liquid fund or an overnight fund on Groww before 11.55 am, then you will receive units based on the NAV of the previous day. However, you also need to ensure that you transfer the funds before 11.55 a.m. too. On the other hand, if you miss the cut-off time and submit your transaction request on Groww after 11.55 am, then you will receive units based on 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.

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

Why were the cut-off timings revised?

Due to the 21-day lockdown in the country to contain the spread of coronavirus, AMCs and RTAs have kept their offices closed. Also, SEBI has urged investors to opt for online transactions since there is no way to accept and process physical forms. As the number of online transactions rises, the authorities need to manage operational roadblocks efficiently with reduced manpower. This seems to be the most probable reason behind the revision.

As per the circular, this is a temporary move and SEBI will review it after the lockdown ends. While this might seem like a lesser time for buying or selling mutual fund units, for the long-term investors, this should not make a huge difference.

Happy 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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