What Are the New Regulations for Overnight Mutual Funds?

From June 1, 2025, the Securities and Exchange Board of India (Sebi) will enforce revised cut-off timings for redemptions in both overnight and liquid mutual fund schemes. As a consequence, investors in mutual funds should prepare for these alterations that are intended to protect their funds.

What’s new?

In the past, fund houses adhered to a consistent cut-off time for both online and offline transactions. That concludes our result.

Sebi has implemented distinct timeframes:

Offline mode (physical requests):

Please submit your navigation for the previous day by 3:00 pm, so that you can receive the next day’s navigation by the following business day.

Finish by 3pm: get next business day’s navigation.

Online mode (overnight schemes only):

Finish by 7:00 pm: get same-day navigation.

Finish by 7pm: get next day’s navigation.

A business day does not include days when money markets are closed.

What is the reason for this modification?

The recent rule aligns with sebi’s upstreaming framework, which has been in place since December 2023. Brokers and clearing members are obligated to transfer all client funds to clearing corporations by the end of each day.

These transfers can be in:

Money.

Secured loans.

Pledged units of overnight mutual fund schemes.

In order to make pledged fund units usable, sebi had to synchronize the redemption timings with the clearing process.

A committee, consisting of amfi, proposed this alteration, which was a result of a series of discussions with the public.

How this Affects You

If you decide to sell your investments in overnight or liquid funds, timing becomes even more important:

Online investors have greater flexibility with the 7 pm cut-off.

Offline investors should adhere to the 3 pm time slot to prevent any navigation issues.

Failing to submit requests after the designated cut-off time will influence which day’s navigation is applied, potentially affecting the outcome of returns.