SEBI's new rule applicable from 1 Jan 2021 - NAV to be allotted only after money reaches MF companies!

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So cut off time will become irrelevant as investors would not be knowing when will the funds actually reach the managers !! Also it will become difficult to take benefit of investing with lumpsum amount when the market goes down considerably on any particular day.

Yes, those will be some of the consequences @goneo :confused:

@Savitri_B @goneo I thought this new regulation was mainly for the people who invested using cheques and not for the people doing online money transfer as the money is almost immediately transferred in IMPS/UPI/NEFT.

Refer : https://www.financialexpress.com/market/sebis-new-nav-rule-to-buy-mutual-funds-to-bring-uniformity-may-impact-sip-cheque-transactions/2086540/

Hey @harshy.027, I am honestly not sure why it is being said that it won’t affect digital platforms at all. It is true that on digital platforms the money reaches faster, esp via payment gateway and in a lot of cases could reach before cut-off too but that doesn’t guarantee same day NAV. Also, in case of NACH used for SIPs, the money will almost definitely not reach the same day.Will read the circular again to check if I have missed anything.

So basically, SEBI is saying this -
“In partial modification to SEBI Circular No. SEBI/IMD/DF/21/2012 dated September 13, 2012, it has been decided that in respect of purchase of units of mutual fund schemes (except liquid and overnight schemes), closing NAV of the day shall be applicable on which the funds are available for utilization irrespective of the size and time of receipt of such application.”

So my interpretation is - for digital platforms there are a lot of cases in which money will reach the same business day and therefore there is a good chance of NAV allocation on the same day whereas with cheques it’s pretty much impossible.

As @Savitri_B said, in cases where payment is done using NACH the payment never reaches the fund manager the same day. In other cases too there are chances where funds are first transferred to clearing house and from there it reaches fund managers there which may cause delay.

@Savitri_B Can STP with the same fund house be a solution to this ? I am not sure if lumpsum is allowed through STP though.

Not sure @goneo because even within a Mutual Fund company, the funds will have to be transferred through some method like IMPS/NEFT etc. so there will always be a chance of not getting the same NAV although the probability may reduce a decent bit.