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nism-series-va-liquid-fund-purchase-cut-off-timing-nav-rule[ MUTUAL FUND DISTRIBUTORS ]

An institutional corporate treasury submits a purchase application of ₹25 Crore in a Liquid Fund on Tuesday at 12:45 PM, and funds are credited to the AMC bank account at 1:15 PM on Tuesday (before the 1:30 PM cut-off). What Net Asset Value (NAV) is allotted to the investor?

[ A ]The closing NAV of Tuesday (same day).

[ B ]The closing NAV of Wednesday (next day).

[ C ]The closing NAV of MONDAY (the business day immediately preceding the day of purchase, capturing Monday night's interest accrual).[ CORRECT ]

[ D ]A nominal Face Value of ₹1,000.00.

Takeaway

Option C is correct: The closing NAV of MONDAY (the business day immediately preceding the day of purchase, capturing Monday night's interest accrual).

Derivation

Liquid and Overnight funds follow a distinct cut-off rule: for realized funds credited to the AMC's bank account before 1:30 PM, the applicable NAV is not the same day's closing NAV but the closing NAV of the immediately preceding business day. Here the money reached the AMC account at 1:15 PM on Tuesday, ahead of the 1:30 PM cut-off, so the investor is allotted Monday's closing NAV rather than Tuesday's. This exists because liquid fund NAVs already build in a day's accrued interest; back-dating the allotment to the prior business day lets same-day-realized money start earning from that base rather than losing a day's accrual. Candidates often default to the standard same-day-NAV logic used for equity or debt funds and miss this liquid-fund-specific backward-dating rule entirely.

Why the others fail

A — The closing NAV of Tuesday (same day).

Same-day NAV allotment under this rule applies only when the funds are realized after the 1:30 PM cut-off, not when they clear the AMC account at 1:15 PM as in this case.

B — The closing NAV of Wednesday (next day).

Next-day NAV is the standard rule for ordinary equity or debt fund purchases; liquid funds follow a separate rule when funds are realized ahead of the 1:30 PM cut-off.

D — A nominal Face Value of ₹1,000.00.

Units are allotted at the prevailing closing NAV of the scheme, which reflects accrued interest and market value — not at a fixed nominal face value of ₹1,000.