SEBI revamps NAV rules
Securities & Exchange Board of India (SEBI) on Thursday issued a circular to revamp the net asset value (NAV) rules. The circular says that, from January 01, 2020, mutual fund investors would receive the purchase NAV of the day when the money gets credited to asset management companies (AMC). Though these new rules would be applicable for equity as well as debt mutual fund investors, it will not be applicable to liquid overnight funds.
Presently, investments up to Rs 2 lakh gets the NAV of the same day if the application is submitted before the cut-off timing. This is irrespective of AMCs realising investors' funds. However, post-cut-off timing, investors would get the next day’s NAV.
In case, the investment is above Rs 2 lakh then, the investors would get the NAV of the day when the fund is realised by AMCs. Say, for instance, you submit the application on Wednesday before cut-off timing and the investment amount reaches AMC the next day then, you would get the NAV of Thursday, rather than of Wednesday.
With effect from January 01, 2021, all investments will be getting NAV of the day when the AMC realises investors’ funds.
The above is applicable for both debt and equity mutual fund investors. Having said that, liquid and overnight funds are excluded from the above change.
Impact on investors
Indeed, it would have an impact on the returns of the investors specifically, those investors, who invest via cheque payment. However, those, who do online fund transfer via UPI or IMPS, would not get affected as the payment in such cases would get realised instantly. Hence, it would be prudent for the investors to invest in mutual funds via UPI or IMPS to get the same-day NAV by investing before the cut-off timings.