NEW DELHI: Come January 1, 2021, mutual fund investors will be able to avail the closing net asset value (NAV) of a scheme on the day their funds are realised. The new NAV rules, however, will not be applicable to liquid and overnight funds and cut-off timings for all schemes shall remain unchanged, said markets regular Securities and Exchange Board of India (Sebi) in a recent circular.
“It has been decided that in respect of purchase of units of mutual fund schemes, closing NAV of the day shall be applicable on which the funds are available for utilisation irrespective of size and time of receipt of such application,” Sebi said. Currently, investment up to Rs 2 lakh in an equity or debt mutual fund gets the NAV of the same day if the application is submitted before 1 pm. For higher sums, the NAV is applicable subject to realisation of funds. This could be up to three days after the cheque is submitted. Sebi is now implementing a level playing field for all investors.
The mutual fund schemes—except liquid and overnight—shall allot the units and NAVs on the basis of when the funds have realised the cheques rather than the size or time of the investments. If you submit the purchase application after 1 pm, you get the next day’s NAV. Similarly, if you submit the application before 12:30 pm you get the previous day’s NAV. In addition to the submission of the application, the new circular also mandates that the money has to reach the fund house on the same day to get that day’s NAV.
Meanwhile, experts say that the new system may be an issue for investors who submit purchase orders very close to the cut off time. Funds can be credited quickly through online fund transfers, but there could be some lag for cheque deposits. Customers of smaller banks also tend to have slower settlement cycles.
That apart, the circular says that AMCs need to put in place a detailed written-down policy including details of the specific activities and the roles and responsibilities of various teams engaged in various activities for the fund