Starting on January 1, 2021, you will get the net asset value (NAV) for a particular day only if your money reaches the house of the fund in question that day, according to a Sebi circular issued today. This removes a previous provision that allowed purchases for the following schemes ₹2 lakh (other than overnight liquid funds) to spend even if the money did not reach the AMC on the same day. The Procurement Provision Below ₹2 lakh does not apply to liquid and overnight funds. Same day funding is already required for purchases in such schemes.
Also, the Sebi circular does not change the cut-off time system for applications. If you submit the purchase request before 1pm for schemes other than liquid funds and overnight, you get the same day NAV. If you send it after 1pm, you will get the NAV for the next day. For liquid and nocturnal schemes, the rule is a bit different. If you send the request before 12:30, you will get the NAV of the previous day. If you send it after 12.30 pm, you will get the same day NAV. These cut-off times were brought forward from 3 pm and 1.30 pm, respectively, in April 2020 due to the Covid 19 blockade. The new circular requires that, in addition to submitting the application before the cut-off time, the money also You must arrive at the fund house the same day to obtain the NAV for that day.
“The new system can be a problem for people who submit purchase orders very close to the cutoff time. Their money may not reach the mutual fund in time for the order to be processed. Also, the clients of the nodal banks (Smaller banks generally) tend to have slower settlement cycles. They can be affected, “said Gaurav Rastogi, CEO of Kuvera, an online platform for direct mutual funds. An AMC executive who spoke to Mint on condition of anonymity said the above-mentioned cut-off times (12.30pm and 1pm) would also apply to the receipt of money. However, another senior official in the operations department of another AMC added that there was ambiguity about what time it would qualify as same-day money in terms of the Sebi circular. He also expressed concern that SIP money will reach the fund houses on time. Most SIPs are below ₹2 lakh in value and these investors are currently insured on the SIP day’s NAV even if there is a delay in money reaching the AMC. The Sebi circular also tightened the rules for mutual fund operations, such as mandatory use of an automated order management system and wise order placement in the scheme if the fund manager is managing multiple mutual fund schemes.
.
