NISM-Series-V-A: Mutual Fund Distributors · Investor Services

Mutual Fund Cut-off Time and Applicable NAV Rules

Updated 11 October 2026

Cut-off time decides which day's NAV you get. For most schemes the cut-off is 3 pm. Redemptions received before 3 pm get that day's NAV. Later requests get the next business day's NAV. For purchases of ₹2 lakh and above in non-liquid schemes, the NAV depends on when funds are available for utilisation.

Understand Purchase, Redemption and Transaction Processes

A mutual fund unit is not bought at a price you choose. You get the NAV (Net Asset Value) of a particular day. The exam asks which day. That is what cut-off time settles.

The cut-off is a fixed time on a business day. For most schemes it is 3 pm. A request received before it gets that day's NAV. A request after it moves to the next business day. A request on a holiday also moves to the next business day. Liquid and overnight schemes have their own purchase cut-off (1:30 pm) and their own redemption payment timeline, so read the question for the scheme type.

For purchases of ₹2 lakh and above in non-liquid schemes, receiving the application is not enough. The application must be received in good order. The NAV is that of the day the money is available for utilisation by the scheme, provided that is before cut-off. So if your client's cheque clears next day, the NAV is next day's. For purchases under ₹2 lakh, the NAV is that of the day of application if it is received before cut-off, irrespective of when the funds become available. For redemptions, only the time the valid request is received matters.

During an NFO (New Fund Offer), units are sold at the face value, usually ₹10, for a limited period. NAV rules do not apply until ongoing sales begin. Investors can apply through ASBA (Application Supported by Blocked Amount). The amount stays in the investor's own bank account, blocked, and is debited only when units are allotted. Investors can also use a UPI mandate to block the amount in the same way.

A switch moves money from one scheme to another, or between plans or options of the same scheme, within the same fund house. It works as a redemption from the source plus a purchase in the target. So cut-off, exit load and tax can all apply. A redemption, by contrast, takes money out to the bank account.

Key formulas to remember

Standard cut-off time: Cut-off = 3:00 pm on a business day (liquid and overnight purchases: 1:30 pm); The 3 pm cut-off applies to redemptions and switch-outs in all schemes, including liquid and overnight schemes, and to purchases in most other schemes. For purchases in liquid and overnight schemes, the cut-off is 1:30 pm. Funds must be available for utilisation before that time to get the applicable NAV. The 1:30 pm cut-off is still in force. The redemption cut-off for these schemes remains 3 pm.
Purchase NAV rule: Purchase of ₹2 lakh and above (non-liquid): funds available for utilisation before cut-off → that day's NAV; otherwise → next business day's NAV. Purchase under ₹2 lakh: application received before cut-off → that day's NAV; The funds-availability rule applies to purchases of ₹2 lakh and above in non-liquid schemes. For purchases under ₹2 lakh, the NAV is of the day of application if it is received before cut-off, irrespective of when funds are available. The application must be received in good order.
Redemption NAV rule: Valid request received before 3 pm → same day NAV; after 3 pm → next business day NAV; A request on a non-business day is treated as received on the next business day.
Redemption payment timeline: Generally within 3 working days (T+3); liquid and overnight funds: 1 working day (T+1); Delay beyond the stipulated time makes the AMC liable to pay interest at the rate specified by SEBI, currently 15% per annum under the SEBI Mutual Funds Regulations.
ASBA: Application Supported by Blocked Amount = amount blocked in the investor's bank account, debited only on allotment; Primarily used for NFO subscriptions.
Switch: Switch = redemption from source scheme + purchase in target scheme; Same fund house only. Exit load and capital gains tax can apply on the source leg.

How to solve Purchase, Redemption and Transaction Processes questions

Use this order for any NAV applicability or transaction question. It stops you from missing the one detail that changes the answer.

1Identify the transaction: NFO, purchase, redemption, or switch.
2Identify the scheme type. For liquid and overnight schemes, the purchase cut-off is 1:30 pm, and funds must be available for utilisation before that time to get the applicable NAV. The redemption cut-off stays at 3 pm. The scheme type also matters for the payment timeline.
3Check the day. If it is a weekend or holiday, move the transaction to the next business day.
4For a purchase of ₹2 lakh and above in a non-liquid scheme, find the time the funds are available for utilisation. For a purchase under ₹2 lakh, use the time the application is received. For a redemption, find the time the valid request was received.
5Compare that time with the cut-off: 3 pm for redemptions and for purchases in most schemes, 1:30 pm for purchases in liquid and overnight schemes. Before it, use that day's NAV. After it, use the next business day's NAV.
6For a switch, split it into the redemption leg and the purchase leg and apply the rules to each.
7For payment timeline questions, pick 3 working days (T+3) for redemption proceeds in most schemes, and 1 working day (T+1) for liquid and overnight schemes.
8Re-read the question for the word asked: NAV date, payment date, or mode of payment.

Quickest way: The 3 pm and funds-available shortcut

When to use it: Use it for any MCQ that gives a time and day and asks which NAV applies.

Underline the day, the time and the amount in the question.
For a purchase of ₹2 lakh and above in a non-liquid scheme, ignore the form time and use the time the money is available. For a purchase under ₹2 lakh, use the time the application is received.
Ask: before the cut-off on a business day (3 pm, or 1:30 pm for liquid and overnight purchases)? If yes, same-day NAV. If no, next business day.
Eliminate options that give an earlier NAV than the day of the transaction. This is wrong in standard schemes.
For timelines, use 3 working days (T+3) for redemption proceeds in most schemes and 1 working day (T+1) for liquid and overnight schemes.

Common mistakes in Purchase, Redemption and Transaction Processes

Using the application submission time for a large purchase (₹2 lakh and above) in a non-liquid scheme, even when the cheque or funds arrive later.
Students link the NAV with the day they applied, as in redemptions.
Fix: For purchases of ₹2 lakh and above, the NAV is of the day funds are available for utilisation, provided the application is in good order and the funds are available before cut-off. For purchases under ₹2 lakh, the application time before cut-off decides the NAV.
Giving the same day's NAV for a redemption request received after 3 pm.
Students forget that cut-off is a hard limit.
Fix: After 3 pm, the request goes to the next business day's NAV.
Forgetting weekends and holidays when moving to the next day.
Students count calendar days instead of business days.
Fix: Always move to the next business day. A Friday after 3 pm means Monday, if Monday is a business day.
Treating a switch as a plain transfer with no cost or tax.
The money never reaches the investor's bank, so it feels free.
Fix: Remember that a switch is a redemption plus a purchase. Exit load and capital gains tax can apply.
Using T+3 for redemption proceeds of liquid or overnight schemes.
Students learn T+3 as the general rule and apply it to every scheme.
Fix: Most schemes pay within 3 working days, but liquid and overnight schemes pay in 1 working day (T+1). Check the scheme type before choosing.
Thinking ASBA debits the money at application and refunds later.
Students compare it with older cheque-based NFO applications.
Fix: In ASBA the amount is only blocked in the investor's account and debited on allotment. The investor keeps the account and earns interest until then.

Worked examples

Example 1

A client applies for ₹5,00,000 of units in an open-ended equity scheme on Wednesday at 1 pm. The cheque is realised and funds are available for utilisation on Thursday at 11 am. Which day's NAV applies?

Show the solution

The transaction is a purchase in a standard (non-liquid) scheme.
The amount is ₹5,00,000, which is ₹2 lakh or more, so the NAV depends on when funds are available for utilisation, not the form time.
Funds are available on Thursday at 11 am, which is before 3 pm.
Thursday is a business day, so Thursday's NAV applies.

Answer: Thursday's NAV

Example 2

A client submits a valid redemption request for a debt scheme (not a liquid or overnight scheme) on Friday at 3:20 pm. The next business day is Monday. Which NAV applies, and within how many working days must proceeds be paid?

Show the solution

The transaction is a redemption in a scheme that is not liquid or overnight.
The request time is 3:20 pm, which is after the 3 pm cut-off.
The request is treated as received on the next business day, Monday.
So Monday's NAV applies.
A scheme other than liquid or overnight pays within 3 working days (T+3) of the redemption.

Answer: Monday's NAV; payment within 3 working days

Exam tips

Most NAV questions give a time and a day. Check both against the cut-off and the business-day calendar before reading the options.
Remember that for purchases of ₹2 lakh and above in non-liquid schemes the NAV depends on funds available, while redemption NAV depends on the request time. Check the amount in the question.
For liquid and overnight schemes, the purchase cut-off is 1:30 pm, and funds must be available for utilisation before that time to get the applicable NAV. The redemption cut-off stays at 3 pm. Redemption proceeds are paid in 1 working day (T+1), against 3 working days in most other schemes.
Learn the definitions: ASBA means the amount is blocked in the bank account, not paid to the AMC at application.
In a switch question, ask which leg is being tested: redemption, purchase, load or tax.

Practice questions from Investor Services

Purchase, Redemption and Transaction Processes: frequently asked questions

What is the cut-off time for mutual funds?

For most schemes it is 3 pm on a business day. A valid request received before it gets that day's NAV. Later requests get the next business day's NAV. For purchases in liquid and overnight schemes the cut-off is 1:30 pm, and funds must be available for utilisation before that time. Redemptions in these schemes still use 3 pm.

What is the redemption timeline in mutual funds, T+1 or T+3?

Redemption proceeds are generally paid within 3 working days (T+3). For liquid funds the timeline is 1 working day (T+1), and overnight funds are also T+1. If the AMC delays beyond the stipulated period, it must pay interest at the rate specified by SEBI, currently 15% per annum under the SEBI Mutual Funds Regulations.

What is the difference between a switch and a redemption?

A redemption takes money out of the scheme and pays it to your bank account. A switch moves it into another scheme of the same fund house. A switch counts as redemption plus purchase, so exit load and tax can apply.

What is ASBA for an NFO?

ASBA is Application Supported by Blocked Amount. The NFO amount is blocked in the investor's bank account and debited only when units are allotted. If units are not allotted, the block is released.

Which NAV applies if my money reaches the fund after cut-off?

It depends on the amount. For purchases of ₹2 lakh and above in non-liquid schemes, the NAV follows the day funds are available for utilisation, so late availability pushes the NAV date forward even if you applied earlier. For purchases under ₹2 lakh, the NAV is of the day of application if it was received before cut-off, whenever the funds arrive.