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08 Aug, 2025
In a move to bolster the security of investor funds, the Securities and Exchange Board of India (SEBI) has announced a significant change in how Net Asset Values (NAVs) are applied to redemptions in overnight and liquid mutual fund schemes. These revised cut-off timings will come into effect starting June 1, 2025.
This initiative is part of SEBI’s ongoing effort to improve the safety of client funds managed by brokers and clearing members.
What’s Changing?
Previously, mutual fund redemptions followed a uniform cut-off time regardless of the transaction mode. Now, SEBI has introduced distinct cut-off times for online and offline redemptions in overnight mutual fund schemes:
New Redemption Timings
Offline Mode (Physical Submissions):
Requests made before 3:00 PM will receive the closing NAV of the day before the next business day.
Requests submitted after 3:00 PM will be processed with the next business day’s NAV.
Online Mode (Only for Overnight Funds):
Requests placed by 7:00 PM will get the same-day NAV.
Requests after 7:00 PM will receive the next business day’s NAV.
Business days exclude holidays or days when money markets are closed.
Why the Change?
This adjustment ties into SEBI’s upstreaming framework, introduced in December 2023, which mandates that brokers and clearing members must transfer all client funds to clearing corporations daily.
This transfer can take place through:
Direct cash,Fixed deposits under lien, or Pledged units of Overnight Mutual Fund Schemes (MFOS).
To make overnight fund units eligible for upstreaming, SEBI needed to align the redemption schedule accordingly. The change was proposed by a working group including AMFI and the Mutual Funds Advisory Committee and finalized after public consultation.
What This Means for Investors
With the new timings in place, investors need to be more mindful of when they redeem their overnight or liquid fund units:
Online transactions offer extended flexibility with a 7 PM cut-off for same-day NAVs.
Offline investors must act before 3 PM to avoid delays.
Missing the cut-off means your redemption will be processed with the next applicable NAV, potentially impacting your returns.
This update emphasizes the importance of timing in mutual fund transactions and aims to improve transparency and fund safety for all participants.
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