Insights

Change in cut-off time

November 2, 2012 . Srikanth Meenakshi

Due to recent SEBI regulations, we are announcing a change in the cut-off time for some mutual fund transactions effective immediately.

Background: As part of the many changes that SEBI enforced on the mutual fund industry starting October 1, fund houses are required to process the allottment of units for  investments only when the funds are realized in their account. Previously service providers such as FundsIndia and payment gateways had a larger window for completing the fund transfer to get the same day NAV for transactions. Now, for certain transactions, this window has been shortened causing us to advance the cut-off time a bit.

Which transactions are affected?

All liquid fund transactions regardless of the investment amount will need to conform to the new cut-off time. All non-liquid fund transactions that are greater than or equal to Rs. 2 lakhs in value will also need to conform to the new cut-off time.

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What is the new cut-off time?

The new cut-off time will be 1 PM.

How is the investment value calculated?

The 2 lakh threshold is applied on a per-scheme level. If you invest Rs. 1 lakh in five different schemes, they will not be affected by the new cut-off time.

An example?

  1. If you are investing in a liquid fund (any amount) by 1 PM on a business day, you will get the same day’s NAV.

  2. If you are investing in a liquid fund (any amount) by 1:30 PM on a business day, you will get the next day’s NAV.

  3. If you are investing in an equity fund for Rs. 2 lakhs by 1 PM on a business day, you will get the same day’s NAV.

  4. If you are investing in an equity fund for Rs. 1 lakh at 1:30 PM on a business day, you will get the same day’s NAV.

  5. If you are investing in an equity fund for Rs. 3 lakhs at 1:45 PM on a business day, you will get the next day’s NAV.

More questions? Please write to us at contact@fundsindia.com

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