**Summary:**
This circular, SEBI/HO/IMD/PoD2/CIR/2025/56, issued by the Securities and Exchange Board of India (SEBI) on April 22, 2025, addresses changes in cutoff timings for determining the applicable Net Asset Value (NAV) for repurchase/redemption of units in Mutual Fund Overnight Schemes (MFOS). This modification is a direct response to the SEBI circular dated December 12, 2023, concerning the upstreaming of client funds by Stock Brokers (SBs) and Clearing Members (CMs) to Clearing Corporations (CCs). The original circular mandated that SBs/CMs place client funds with CCs in the form of cash, lien on Fixed Deposit Receipts, or pledge of MFOS units.
To facilitate the use of MFOS unit pledges for upstreaming, SEBI, following recommendations from an industry Working Group, the Association of Mutual Funds in India (AMFI), and the Mutual Funds Advisory Committee (MFAC), and after public consultation, has modified para 8.4.5.4 of the Master Circular for Mutual Funds dated June 27, 2024.
The revised cutoff timings for repurchase of units in liquid fund and overnight fund schemes are as follows:
* Applications received up to 3:00 pm will receive the closing NAV of the day immediately preceding the next business day.
* Applications received after 3:00 pm will receive the closing NAV of the next business day.
* Applications received through online mode, the cutoff timing of 7 PM shall be applicable for overnight fund schemes.
The circular clarifies that a "Business Day" excludes days when money markets are closed or inaccessible.
This circular comes into effect on June 01, 2025. It is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, and regulation 49 of the SEBI Mutual Funds Regulations, 1996, to protect investor interests and regulate the securities market.
The circular is available on the SEBI website (www.sebi.gov.in) under the "Legal Circulars" section. For further information, contact Lakshaya Chawla, Deputy General Manager, Investment Management Department, at 022-26449369 or lakshayac@sebi.gov.in.
Key Entities Referenced
Securities and Exchange Board of India: Regulatory body for securities market in India, also known as SEBI.
Association of Mutual Funds in India: Industry association of mutual funds in India, also known as AMFI.
Mutual Funds: Refers to professionally managed investment schemes, regulated by SEBI.
Asset Management Companies: Companies that manage pooled investment funds for clients.
Mutual Fund Overnight Schemes: A type of mutual fund scheme that invests in overnight securities.
SEBI Mutual Funds Regulations, 1996: Regulations governing the operations of mutual funds in India, as established by SEBI.
Clearing Corporations: Organizations that provide clearing and settlement services for financial transactions.
Mutual Funds Advisory Committee: A committee advising on matters related to mutual funds.
CIRCULAR
SEBI/HO/IMD/PoD2/P/CIR/2025/56 April 22, 2025
All Mutual Funds/
All Asset Management Companies (AMCs)/
All Trustee Companies/ Board of Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)/
Registrar Transfer Agents (RTAs)
Sir / Madam,
Subject: Change in cut-off timings to determine applicable NAV with respect
to repurchase/ redemption of units in overnight schemes of Mutual Funds
1. With a view to safeguard clients’ funds placed with Stock Brokers (SBs) /
Clearing Members (CMs), SEBI vide circular “Upstreaming of clients’ funds by
Stock Brokers (SBs)/ Clearing Members (CMs) to Clearing Corporations (CCs)”
dated December 12, 2023 (“upstreaming circular”) has specified the framework
requiring SB/CMs to upstream (i.e. place with) all the clients’ clear credit
balances to CCs on End of Day basis. The clients’ funds shall be upstreamed by
SB/ CMs to CCs only in the form of either cash, lien on Fixed Deposit Receipts
created out of clients’ funds, or pledge of units of Mutual Fund Overnight
Schemes (MFOS) created out of clients’ funds.
2. In order to operationalize the upstreaming of clients’ funds in the form of pledge
of units of MFOS, a Working Group of industry participants, AMFI and members
of the Mutual Funds Advisory Committee (MFAC) recommended a change in
cut-off timings to determine applicable NAV with respect to repurchase of units
Page 1 of 3in overnight fund schemes. Thereafter, the proposal was placed for public
consultation.
3. Based on the analysis of public feedback, para 8.4.5.4 of the Master Circular for
Mutual Funds dated June 27, 2024 stands modified as under:
8.4.5.4
The following Cut-off Timings shall be observed by AMCs with respect to
repurchase of units in liquid fund & overnight fund schemes and plans and the
following NAVs shall be applied for such repurchase:
a. Where the application is received up to 3.00 pm – the closing NAV of day
immediately preceding the next business day; and
b. Where the application is received after 3.00 pm –the closing NAV of the next
business day.
Provided that in case application is received through online mode, the cut-off
timing of 7 PM shall be applicable for overnight fund schemes.
Explanation: “Business Day” does not include a day on which the Money Markets
are closed or otherwise not accessible.
4. The provisions of this circular shall come into force from June 01, 2025.
5. This circular is issued in exercise of powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act, 1992, read with the provisions
of regulation 49 of SEBI (Mutual Funds) Regulations, 1996, to protect the interest
Page 2 of 3of investors in securities and to promote the development of, and to regulate the
securities market.
6. This circular is available at www.sebi.gov.in under the link “Legal > Circulars”.
Yours sincerely,
Lakshaya Chawla
Deputy General Manager
Investment Management Department
Tel no.: 022-26449369
Email: lakshayac@sebi.gov.in
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