Changes in rules for NAV applicability from 01 Febuary 2021

Securities & Exchange Board of India (SEBI) had issued a circular to revamp the net asset value (NAV) rules.

The circular says that, from February 01, 2020, mutual fund investors would receive the purchase NAV of the day when the money gets credited to asset management companies (AMC). 

Presently, investments up to Rs 2 lakh gets the NAV of the same day if the application is submitted before the cut-off timing. This is irrespective of AMCs realizing investors’ funds. However, post-cut-off timing, investors would get the next day’s NAV. This was the norm for non Liquid Funds.

With effect from January 01, 2021, all investments will be getting NAV of the day when the AMC realizes investors’ funds.

SEBI Circular reference : SEBI/HO/IMD/DF2/CIR/P/2020/175

Note: The Changes were extended for one Month and new implementation date is 01 Feb, 2021

Impact on Buy orders:

Investors may not get same-day NAV if they use payment modes other than Net Banking(Direct). The expected time taken for the realization of funds depends on the payment mode as listed below.

Net Banking (Direct): T day
Net Banking (Nodal): T+1 Day
UPI: T+1 Day
NEFT: T+1 Day
Mandate: T+2 Day

Here, T is the day on which the order was placed within the cut-off timings. For Liquid and Overnight fund orders, the cut-off time is 1:00 PM. For all other funds, the cut-off time is 2:30 PM. Orders placed after the cut-off time are considered as orders of the next business day.

Direct in Net Banking refers to transfers where you and the beneficiary, in this case, BSEStarMF have accounts within the same bank. At present, BSE supports direct Net Banking with 7 Banks –

• HDFC Bank
• Axis Bank
• ICICI Bank
• SBI Bank
• Kotak Mahindra Bank
• IDBI Bank
• Yes Bank

All other banks other than those above are referred to as Nodal Banks.

Fund transfers are faster for direct net banking transfers and can take up to 2 business days for Nodal banks depending on the bank you use.

For SIP orders the timeline can be expected for T+2 days.

Impact on Switch Orders:

Switch and STP orders are redemption & purchase orders. Units are redeemed from the Switch Out Fund and units are purchased in the Switch IN Fund. NAV of the order day will continue to apply to switch out orders. Switch in orders will get processed only after the switch out leg settles.

Redemption/switch-out cycle depends upon the category of fund you are switching out from –

Note: The timeline shared above are expected timelines based on the business operations but there can be settlement delays by the exchange or payment gateways beyond Piggy’s control.