Cut-off time and applicable NAV

Q: For a purchase into an equity fund, which day's NAV applies?

The NAV of the day funds are available for use, if by 3:00 PM. For equity/debt (non-liquid) purchases, you get the NAV of the business day the funds are available for utilisation, provided the application is in by the 3:00 PM cut-off, for any amount.

Q: The subscription cut-off for liquid and overnight funds is:

1:30 PM. Liquid and overnight fund purchases have an earlier 1:30 PM cut-off. Meet it with funds available, and you get the closing NAV of the immediately preceding day.

Q: A redemption request for an equity fund is time-stamped at 3:30 PM. Which NAV applies?

The next business day's NAV. The redemption cut-off is 3:00 PM. After it, the next business day's NAV applies; before it, the same day's NAV would apply.

Q: For purchases, the applicable NAV depends mainly on:

When the funds become available for utilisation. The rule is realisation-based and applies to any amount, you get a day's NAV only once the money is available for utilisation by the fund.

Q: Cut-off timing rules do NOT apply to:

NFOs and international schemes. NFOs and international schemes are outside the cut-off timing framework; liquid, equity and switch transactions all follow it.

Which day's NAV you get

Cut-off time and realisation of funds

The same order, minutes apart, can be priced at a different day’s NAV, which is exactly why this fiddly topic is such a reliable source of marks. Two things decide the answer: the cut-off time, and, for purchases, when the money is actually available for utilisation (its realisation).

Start with purchases. For equity and debt funds (everything except liquid/overnight), the cut-off is 3:00 PM, and, for any amount, you get the NAV of the business day on which the funds are available for utilisation. That last phrase is the whole trick: submitting the form is not enough, the NAV follows the money. For liquid and overnight funds, the cut-off is earlier at 1:30 PM; if the application is in by cut-off and the funds are available before it, you receive the closing NAV of the day immediately preceding, which is why these funds even have NAVs for Sundays and holidays.

Now redemptions, where the cut-off is 3:00 PM across schemes. For an equity or debt (non-liquid) fund, a request before cut-off gets the same day’s NAV, and one after cut-off gets the next business day’s. For a liquid fund, a request before cut-off gets the NAV of the day immediately preceding the next business day. Two boundaries close it out: the whole framework does not apply to NFOs or international schemes. Keep the two cut-off times (3:00 PM and 1:30 PM) and the one realisation rule firmly in mind, and this high-yield topic becomes a set of near-automatic marks.

Cut-off rules follow SEBI’s current framework. Education for the NISM Series V-A exam, not financial advice.

1
The applicable NAV depends on when the request is time-stamped against the scheme's cut-off time, and, for purchases, on when the funds are available for utilisation.
2
Cut-off for purchases and switch-ins into equity and debt funds (other than liquid/overnight) is 3:00 PM; you get the NAV of the business day the funds are available for utilisation, for any amount.
3
Cut-off for purchases into liquid and overnight funds is 1:30 PM; if received by cut-off and funds are available before it, you get the closing NAV of the day immediately preceding.
4
Cut-off for redemptions and switch-outs is 3:00 PM for all schemes.
5
Redemption from equity/debt (non-liquid) funds: same-day NAV if before cut-off, next business day's NAV if after.
6
Redemption from liquid funds: NAV of the day immediately preceding the next business day if received before cut-off.
7
The purchase rule turns on realisation, not just submission, so money that clears late gets a later NAV, whatever time the form was handed in.
8
Cut-off timing does not apply to NFOs or international schemes.

Rupee example

You submit a purchase into an equity fund at 2:55 PM, but the money is only available for utilisation the next day, you get the next day's NAV, not today's, because for purchases the applicable NAV follows when the funds are realised, not when you applied.

Practice

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Real exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.

For a purchase into an equity fund, which day's NAV applies?

For equity/debt (non-liquid) purchases, you get the NAV of the business day the funds are available for utilisation, provided the application is in by the 3:00 PM cut-off, for any amount.

It is not the submission day regardless of funds, nor a fixed previous-day rule.

The subscription cut-off for liquid and overnight funds is:

Liquid and overnight fund purchases have an earlier 1:30 PM cut-off. Meet it with funds available, and you get the closing NAV of the immediately preceding day.

3:00 PM is the general cut-off for other schemes and for redemptions.

A redemption request for an equity fund is time-stamped at 3:30 PM. Which NAV applies?

The redemption cut-off is 3:00 PM. After it, the next business day's NAV applies; before it, the same day's NAV would apply.

Today's or the previous day's NAV would apply only before cut-off / under different rules; there is no 'lowest of the week' rule.

For purchases, the applicable NAV depends mainly on:

The rule is realisation-based and applies to any amount, you get a day's NAV only once the money is available for utilisation by the fund.

There is no amount threshold in this rule, and age or location are irrelevant.

Cut-off timing rules do NOT apply to:

NFOs and international schemes are outside the cut-off timing framework; liquid, equity and switch transactions all follow it.

Liquid, equity and switches are all governed by cut-off timing.

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NISM V-A syllabus

1 The investment landscape

2 What a mutual fund really is

3 How a fund is built

4 Who watches over it

5 The offer document, decoded

6 Getting funds to investors

7 Selling the right way

9 NAV, loads and the daily price

10 Types of schemes, and picking one

11 Return, risk and performance

12 How gains are taxed

13 Serving the investor

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Which day's NAV you get

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