Starting June 1, 2025, the Securities and Exchange Board of India (Sebi) is implementing new cut-off timings for calculating the Net Asset Value (NAV) on repurchases of units in overnight fund schemes. This change is part of Sebi’s broader efforts to enhance the management of client money in these funds, focusing on improving the transparency and efficiency of transactions.
Key Changes
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Cut-off Timings for Redemption Requests:
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Before 3 PM: Redemption requests received up to 3 PM will get the NAV of the day immediately preceding the next business day.
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After 3 PM: Redemption requests received after 3 PM will get the NAV of the next business day.
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Online Redemption Requests for Overnight Funds:
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A special cut-off time of 7 PM will apply to online redemption requests for overnight fund schemes.
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Detailed Circular Information
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Sebi's April 22, 2025, Circular states:
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For redeem requests before 3 PM, the applicable NAV will be for the day before the next business day.
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For requests after 3 PM, the NAV will be the closing NAV of the next business day.
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Online requests for overnight funds specifically will follow the later cut-off of 7 PM.
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Objective Behind the Change
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Client Fund Management: Sebi’s decision aims to ensure that stock brokers and clearing members are using client funds judiciously, especially in overnight mutual fund schemes (MFOS), which invest solely in low-risk government securities that mature within one day, safeguarding the value of client funds.
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Safety Measures: Sebi mandates that units of MFOS must always be held in demat form and pledged with a clearing corporation, guaranteeing the safety of client funds and their easy redemption when needed.
Impact
This move is expected to bring more efficiency and security to overnight fund schemes, reinforcing trust among investors by streamlining redemption timelines and enhancing transparency in the way NAVs are calculated.
