The Problem - On June 4, many people who used online platforms like Zerodha and Groww to buy mutual funds faced a problem. Even though they bought their mutual funds before the cut-off time, they were given the Net Asset Value (NAV) for June 5 instead of June 4. This caused them to lose money on paper because the market had gone up on June 5 after falling on June 4.
Investors found themselves stuck in a blame game between brokers, the Bombay Stock Exchange (BSE), and payment processors.
Here’s what each party said: Groww and Zerodha - They said they only place orders and the whole process is managed by BSE. BSE - They said there was no technical glitch on their end, but there was a delay in receiving payments from some UPI transactions.
Payment Processors - There was a delay in sending the payment information to the Indian Clearing Corporation (ICCL), which handles clearing and settlement.
Expert Opinion - Dhirendra Kumar, an expert, explained that the delay happened because the payment didn’t reach the clearing corporation on time. z According to the rules, the mutual fund company can only allocate the NAV if they receive the payment confirmation before the cut-off time.
SEBI Guidelines - The Securities and Exchange Board of India (SEBI) has strict rules for mutual fund transactions: - For Liquid and Overnight funds, the cut-off time is 1 PM. - For Non-Liquid funds, it’s 2:45 PM. - To get the same day’s NAV, the payment must reach the Asset Management Company (AMC) by these cut-off times.
Advice for Investors - To avoid such problems, it’s better to: - Buy directly from mutual fund websites or apps. - Use the same bank account linked to your mutual fund account. - Use UPI IDs from the same bank or the BHIM app instead of other payment apps like GPay, PhonePe, or Paytm.
The incident on June 4 highlighted the need for better coordination among all parties involved in mutual fund transactions to prevent such issues in the future.
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