The usual assumption about mutual fund cut-off times is that submitting a purchase order before the deadline - 1:30 PM for liquid and overnight funds - locks in that day’s NAV. Since a September 2020 SEBI circular, phased in fully from 1 February 2021 to cover every scheme, that assumption has been incomplete. What actually determines the applicable NAV is when the money is realised in the fund house’s bank account - not when the order was placed.
An order submitted at 1:00 PM, comfortably ahead of the cut-off, still gets the next business day’s NAV if the payment itself doesn’t clear into the AMC’s account by the cut-off. A payment method that settles instantly - UPI, or a same-bank transfer - clears in time. One that takes longer to reflect - certain NEFT windows, or a cheque - can miss the cut-off even when the order itself was filed well before it.
The Rule Closed a Genuine Timing Gap
The rule exists because, before it, an investor could effectively buy today’s NAV with money that hadn’t actually left their account yet - submitting an order ahead of a market-moving event while the payment cleared afterward, capturing a price the fund hadn’t genuinely received the cash to trade against. Tying the applicable NAV to realised funds, rather than to the order timestamp, closes that gap.
For an investor, the practical version is simple: the cut-off time on the screen describes half the rule. The other half is whichever payment rail was used, and how long it actually takes to settle - and that second half is the one that decides which day’s NAV actually applies.
Check the settlement rail, not just the clock. UPI or a same-bank transfer clears in time; certain NEFT windows and cheques will not - and the payment rail, not the order timestamp, is what decides which day’s NAV applies.
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