AMFI NAV Cutoff Time
The AMFI NAV cutoff time is the regulatory deadline by which a mutual fund purchase or redemption application — along with the required cleared funds — must be received by the AMC or Registrar and Transfer Agent (RTA) for the investor to be allotted or redeemed at that day's NAV, with different cutoff times applying to liquid funds, overnight funds, and other fund categories.
The NAV cutoff time mechanism was designed to prevent market-timing abuse in mutual fund investing. Without cutoff rules, investors could theoretically submit purchase or redemption requests after observing the day's market movement — for example, submitting a purchase order after the equity market had already risen sharply on a given day, thereby obtaining the benefit of gains already reflected in the portfolio without having borne the risk of holding the fund through that day. SEBI established cutoff time rules to ensure that investors transacting after a specified time receive the next day's NAV rather than the current day's.
For equity and hybrid funds (other than overnight and liquid), the standard cutoff time is 3:00 PM on a business day. Applications received along with cleared funds before 3:00 PM are processed at the same-day NAV. Applications received after 3:00 PM are processed at the next business day's NAV. This 3:00 PM cutoff was designed to allow the fund's NAV calculation — which is based on end-of-day prices of underlying securities — to occur after the transaction deadline.
For liquid funds, SEBI imposed more stringent rules. The cutoff time for liquid fund purchases is 1:30 PM — applications received with cleared funds before this time receive the same-day NAV, while those received after 1:30 PM receive the next business day's NAV. For liquid fund redemptions, the cutoff is 3:00 PM, and the proceeds are credited by 10:00 AM the following business day. For overnight funds, the cutoff for purchases is 1:30 PM, similar to liquid funds.
A critical element introduced by SEBI in 2010 was the cleared funds requirement. Prior to this, investors could submit purchase applications with cheques, and NAV allotment was based on when the application was received — not when the funds actually cleared. This created a situation where investors could get favourable NAVs while their cheque funds had not yet been received by the fund. SEBI mandated that NAV allotment must be based on when both the application and cleared funds are received. For applications submitted via RTGS/NEFT (online transfers), allotment depends on when the credit appears in the AMC's account — which for intra-bank transfers within the same bank can be instantaneous, but for inter-bank transfers depends on settlement cycles.
For redemptions, the cutoff determines which day's NAV the investor receives. For equity and hybrid funds, redemption requests received before 3:00 PM receive the same-day NAV, while those received after 3:00 PM receive the next business day's NAV. Redemption proceeds for equity funds must be dispatched within 3 working days (T+3), though in practice RTGS transfers are typically completed within 1-2 working days from the redemption processing date. Investors planning to use redemption proceeds for time-sensitive payments should factor in the cutoff time and processing cycle to avoid liquidity mismatches.