10.8 Cut-Off Time and Time Stamping

Why the Rules Exist

NAV is struck once a day after markets close. Without a cut-off, an investor could watch the market rise through the afternoon and then subscribe at a NAV computed before the rise, at the expense of existing unitholders. Cut-off timings and the realisation requirement close that gap.

The Cut-Off Timings

Note the asymmetry: the earlier purchase cut-off applies only to liquid and overnight schemes, and only on the purchase side. Redemption is 3:00 PM across the board.

Realisation of Funds Governs Purchase NAV

Since 1 February 2021, for all schemes other than liquid and overnight:

The applicable NAV for a purchase is that of the day on which the funds are available for utilisation by the scheme, irrespective of the amount invested.

The phrase "irrespective of the amount" matters historically. Before this change, purchases below INR 2 lakh received same-day NAV on receipt of the application, while larger purchases required realisation. That distinction is gone, and material describing a INR 2 lakh threshold is out of date.

So two conditions must both be met for same-day NAV on a purchase:

1. Application received at an Official Point of Acceptance before 3:00 PM, and
2. Funds available for utilisation by the scheme before the cut-off

If either fails, the next applicable day's NAV applies.

Liquid and overnight schemes work differently

For these schemes the purchase rule looks backwards:

• Where the application is received before 1:30 PM and the funds are available for utilisation before the cut-off, the applicable NAV is that of the day immediately preceding the day of receipt.
• Where either condition fails, the NAV of the day immediately preceding the next applicable day applies.

The logic is that liquid schemes accrue income daily and an investor whose money is available to the scheme should participate from the preceding day's valuation.

Redemption

For redemption there is no realisation question — the units already exist. The applicable NAV is that of the day the request is received at an OPA before 3:00 PM; requests received after that receive the next business day's NAV.

One extension applies. Since 22 April 2025, a redemption request in an overnight fund submitted online is treated as received on that business day if it arrives by 7:00 PM rather than 3:00 PM. The relaxation is confined to overnight schemes and to the online channel; a physical request at an OPA, and every request in a liquid scheme, still runs to 3:00 PM.

Time Stamping

Time stamping is the mechanism that makes cut-off rules enforceable and auditable.

• Every application received at an Official Point of Acceptance is stamped with the date and time of receipt.
• Stamping machines carry tamper-evident serial numbers, and electronic channels generate equivalent electronic logs.
• Stamps run in continuous sequence, so a missing or out-of-sequence number is visible on inspection.
• Records are retained and are subject to audit and SEBI inspection.
• Cancelled or damaged stamps must be preserved and accounted for.

The stamp is the evidence. In a dispute about which NAV should have applied, the time stamp settles it.

The Distributor's Exposure

The rule that catches distributors:

Handing an application to the distributor is not receipt by the mutual fund. Receipt occurs when the application reaches an Official Point of Acceptance and is time stamped there.

A distributor who collects a cheque at 11:00 AM and submits it the following morning has cost the investor a day's NAV movement. If the distributor promised "today's NAV", they have also made a representation they did not keep.

Safe practice:

• Submit the same day, and early enough to clear the cut-off
• Explain that applicable NAV depends on receipt at the OPA and realisation of funds, not on when the form was handed over
• For time-sensitive purchases, prefer electronic transfer over cheques, since realisation is faster and more predictable

Worked Scenarios

The second row is the one investors query most, and the answer is always the same: for purchases, the money must be with the scheme, not merely on its way.