SEBI Revises NAV Cut-off Time for Mutual Fund Overnight Scheme Transactions

Overnight Mutual Fund Schemes are low-risk options that invest in government securities for just one day. They are mainly used by stockbrokers and clearing members to safely invest client money. SEBI has now updated the cut-off timings for when the Net Asset Value (NAV) is applied during redemptions. The investments are always held in demat form and must be pledged with a clearing corporation.

SEBI’s New Cut-Off Timings

SEBI has updated the cut-off timings for calculating the NAV during redemption or repurchase of overnight fund units.  

• If the application is submitted before 3 pm, the NAV used will be from the day before the next business day.  

• If submitted after 3 pm, the NAV of the next business day will be considered.  

• For online applications, the cut-off is extended to 7 pm.  

These changes will be effective from June 1.

Purpose of the Change in Cut-Off Time

The main goal behind adjusting the cut-off times is to give stockbrokers and clearing members more time to unpledge their units and send redemption requests after the market closes. This change is operational and doesn’t affect the value or performance of the funds.

How Redemption Works in These Schemes

Overnight funds do not need to sell any securities in advance to handle redemption. When investors want to redeem, the fund simply decides not to reinvest the maturing amount on the next day (T+1). This amount is then used to make the payout. Hence, whether the redemption request is made at 3 pm or 7 pm does not affect how the fund operates or handles redemptions.

Read More: SEBI Plans to Raise Mutual Fund Caps in REITs and InvITs

Conclusion

SEBI’s revised NAV cut-off rules for Overnight Mutual Fund Schemes are a practical move to help brokers manage post-market operations more efficiently. By allowing more time for redemptions without affecting fund stability, SEBI ensures both operational ease and investor protection remain intact.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.