NAV cut-off reform (February 2021)

Tue, 19 May 2026 00:00:00 +0000

In February 2021, SEBI revised the applicable NAV cut-off rule for mutual fund subscriptions, removing the same-day NAV benefit for amounts above Rs 2 lakh in liquid and overnight schemes. The reform was the most significant change to the applicable NAV / cut-off rule framework in years and was implemented to prevent operational arbitrage that some institutional investors had been exploiting.

For Indian retail investors, the February 2021 reform changed the operational expectations for large-lump-sum mutual fund investments. The previous “free pricing” of large amounts gave way to a “money-realisation” requirement, aligning Indian practice with international standards.

Reform on WebNotes

NAV cut-off reform (February 2021)