Sebi Extends Instant Cash Facility to MFs’ Overnight Schemes


The Securities and Exchange Board of India has said mutual funds can offer instant access facility in overnight schemes. This arrangement provides investors access to their money within few hours of placing their redemption request.

The regulator revised its earlier circular which allowed only liquid funds to offer this facility to investors. Now, mutual funds can provide this arrangement to both overnight and liquid schemes. Under this facility, investors can withdraw instantly up to ₹50,000. Currently, cash transfers to the unitholder’s bank account take around two days for liquid and overnight schemes after redemption request is placed.

Sebi also said the unclaimed redemption and dividend amounts, that are currently allowed to be deployed only in money market instruments, would also be allowed to be invested in a separate plan of only overnight, liquid and money market schemes of mutual funds.

“Provided that such schemes, where the unclaimed redemption and dividend amounts are deployed, shall be only those overnight scheme/ liquid scheme / money market mutual fund schemes which are placed in A-1 cell (relatively low interest rate risk and relatively low credit risk) of potential risk class matrix,” Sebi said in a circular.

Separately, the regulator has also clarified rules on intra-day net asset value for transactions in units of exchange-traded funds.

It said intraday NAV based on the executed price at which the securities representing the underlying index or commodities are purchased or sold, would be applicable.

“Industry that has provided a feedback for transactions in units of exchange traded funds by authorised participants / large investors directly with the AMCs, ‘closing NAV of the day’ may not be relevant as these transactions are based on price at which the securities representing the underlying index or underlying commodity are purchased or sold,” Sebi said.


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