The directive of Securities and Alternate Board of India (SEBI) that – in case of buy of items of mutual fund schemes (besides liquid and in a single day schemes), the closing NAV of the day shall be relevant on which the funds can be found for utilisation no matter the scale and time of receipt of such utility – has made the small traders a fearful lot.

It’s because the standards of making use of NAV on the day on which the funds can be found for utilisation is presently relevant on investments of Rs 2 lakh or extra, whereas smaller traders investing lesser quantity get the identical day NAV on the date of utility, offered the functions are submitted earlier than the cutoff time.

The cutoff time for buy and redemption of fairness and debt funds (besides liquid funds) is 3 pm, whereas the cutoff time for buy of liquid funds is 2 pm.

On submitting an utility throughout the cutoff time for buy of items of MF schemes for lower than Rs 2 lakh, an investor will get the items allotted on the NAV of the date of utility, whereas the traders investing Rs 2 lakh or extra will get the NAV of the date on which the cash is realised.

To convey parity amongst each small (investing lower than Rs 2 lakh) and large traders (investing Rs 2 lakh or extra), market regulator SEBI had earlier directed that from January 1, 2021, items can be allotted to all traders, no matter measurement of funding, solely after the realisation of funds or on the NAV of the day on which funds turn out to be obtainable for utilisation.

Applicability of NAV upon realisation of funds to make it troublesome to spend money on MF at a desired value

Nevertheless, giving reduction to small traders for some extra time, the market regulator has postponed the implementation of NAV applicability for Mutual Fund transactions by one month to February 1, 2021.

So, until February 1, 2021, small traders, investing lower than Rs 2 lakh, might benefit from availing the identical day NAV by submitting utility types earlier than the cutoff time on a day of market fall.