In a significant move to bolster investor protection and streamline fund flows, the Securities and Exchange Board of India (SEBI) will implement revised redemption rules for liquid and overnight mutual fund schemes, starting June 1, 2025. The regulator has now specified separate cut-off timings for online and offline modes, ending the earlier uniform deadline.
This strategic shift falls under the upstreaming framework, already in effect since December 2023, which mandates brokers and clearing members to transfer client funds to clearing corporations by the end of each trading day.
Offline Mode: Investors Must Submit Redemption Requests by 3:00 PM
For those using physical (offline) modes of redemption:
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If the request is submitted on or before 3:00 PM, the investor will be eligible for the previous business day’s Net Asset Value (NAV), applicable on the next business day.
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For redemption requests made after 3:00 PM, the NAV of the next business day will be applied.
This rule emphasizes the need for timely submission to avoid NAV mismatches and delays.
Online Mode: Extended Deadline of 7:00 PM for Overnight Schemes Only
Investors using online platforms for redemption in overnight mutual fund schemes will benefit from an extended cut-off time:
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Requests made on or before 7:00 PM will receive the same day’s NAV.
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Requests placed after 7:00 PM will be allotted the next business day’s NAV.
Note: Business days exclude weekends and market holidays, and NAV application is strictly subject to time-stamped confirmations.
Part of SEBI’s Larger Goal: Transparency, Safety, and Investor Confidence
As per SEBI’s framework, brokers and clearing members are now required to transfer all client funds, including:
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Cash balances
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Fixed Deposit Liens
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Pledged units of overnight mutual fund schemes
…to the clearing corporation by day’s end. This regulatory reform aims to increase transparency, reduce risk, and ensure that investor money is safe and traceable at all times.
What Should Mutual Fund Investors Keep in Mind Now?
This new rule puts the onus on investors to be more aware of timing:
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Online investors gain more flexibility, with the 7 PM deadline allowing late decisions.
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Offline investors must act with urgency and ensure forms are submitted before 3 PM.
Investors are advised to plan redemptions carefully to align with new NAV eligibility rules and avoid disappointment due to delayed NAV allotment.
