Mutual Fund Cut Off Time

What is the Mutual Fund Cut Off Time?

Mutual Fund Cut Off Time is the deadline set by SEBI that decides which day’s NAV will apply to a mutual fund transaction. Simply applying is not enough; the money must also be credited to the scheme’s account before the MF cut off time for that day’s NAV to be considered. This rule ensures fair treatment among investors and prevents anyone from gaining an advantage based on market timing.

For example, assume Monday, Wednesday, and Thursday are business days, while Tuesday is a non-business day. If an investor applies on Monday to buy units of an equity mutual fund worth ₹3,00,000 and the funds are realised by 2:00 PM on Wednesday, Wednesday’s NAV will be applicable. If the funds are realised after 5:00 PM on Wednesday, then Thursday’s NAV will apply.

In the case of a liquid fund, if an investor applies on Monday and the funds are credited by 1:00 PM on the same day, the NAV of Sunday will apply. If the funds are realised by 3:00 PM on Monday, then Tuesday’s NAV will be considered. Even if the funds are credited on Wednesday morning, the NAV of Tuesday will still apply.

Role of Cut-Off Timing in Determining the Applicable NAV

The applicable NAV depends on the scheme type, the transaction's nature, and when both the application and the funds are received. SEBI has prescribed the following framework:

How is the Applicable NAV Determined?

The Applicable NAV date in mutual funds depends on two factors: when the application is submitted and when the money is credited to the mutual fund’s bank account. As per SEBI’s rule, effective 1st February 2021, both conditions must be met before the same day’s NAV applies. This applies to all schemes, not just liquid or overnight funds.

Here is how it works:

• If both the application and funds are received before 3:00 PM (for most schemes), you get the same day’s NAV.

• If the application is received before 3:00 PM, but funds are credited after 3:00 PM, you get the NAV of the next business day when funds are available before the cut-off.

• If both the application and funds are received after 3:00 PM, the NAV of the following business day will apply.

In short, NAV allotment depends on when you submit your request and when the money reaches the fund’s account.

Examples:

• Lump Sum Purchase: Suppose you invest ₹50,000 and submit your request before 3:00 PM on Thursday.

  • If funds are credited before 3:00 PM on Thursday, you get Thursday’s NAV.

  • If funds reach 5:00 PM on Thursday, you get Friday’s NAV.

  • If funds are credited at 4:00 PM on Friday, you get Monday’s NAV, since Saturday and Sunday are non-business days.

• SIP Transaction: SIP units were allotted earlier as per the SIP debit date. Now, units are allotted at the NAV of the SIP date only if funds are credited before 3:00 PM. If the SIP amount reaches the AMC’s account after 3:00 PM, the next business day’s NAV will apply.

This is why investors are encouraged to use faster electronic payment modes like Net Banking, UPI, or Auto-Debit to avoid delays.

How to Get the Same Day NAV in Mutual Funds?

To improve your chances of receiving the same day’s NAV, keep the following in mind:

• Invest directly through the AMC’s website or app: Many Asset Management Companies (AMCs) have direct integrations with banks, which enable faster fund transfers. Investing directly through their platform increases the chances of same-day NAV allotment.

• Use third-party platforms carefully: Exchanges such as NSE and BSE facilitate mutual fund transactions but often have earlier operational cut-offs (2:30 PM). If you submit your order before this cut-off, your transaction will be processed promptly, similar to AMC platforms.

• Avoid last-minute transactions: Placing an order just before 3:00 PM is risky, especially through intermediaries. Using the AMC’s direct channel is safer when investing closer to the deadline.

At the same time, investors should avoid common mistakes that can affect their returns:

• Missing cut-off timings, resulting in a different NAV than intended.

• Ignoring fund performance and holding on to underperforming schemes.

• Failing to diversify increases portfolio risk.

• Skipping SIP instalments disrupts long-term investment discipline.

How to Ensure Timely Mutual Fund Transactions?

To optimise your investments and avoid NAV delays, follow these practices:

• Know the cut-off timings:

  • Equity and Debt Funds: 3:00 PM

  • Liquid and Overnight Funds: 1:30 PM (purchases) and 3:00 PM (Mutual Fund redemption time)

• Use instant payment methods: Prefer UPI or net banking through supported banks, which transfer funds quickly.

• Plan: Start transactions well before the cut-off to allow buffer time for processing delays.

• Check confirmations: Always verify that your transaction has been successfully processed on your AMC or broker platform.

Key Takeaways

The Mutual Fund Cut Off Time is essential for investors as it directly impacts which day’s NAV will apply to their transactions. The application submission and fund realisation must happen before the same day’s NAV cut-off. SEBI’s revised rule from February 2021 ensures fairness by linking allotment strictly to fund availability. Whether investing through a lump sum or the best SIP plans, timely money transfer is critical. The faster electronic payment modes help avoid delays and ensure your investments are processed at the intended NAV.