What is it?
When you submit your application form to your mutual fund (MF) or its registrar’s office, it is passed through a little machine that stamps the time and day of submission. This process is called time-stamping and is the first acknowledgement or proof of your investment.
What does it signify?
The Securities and Exchange Board of India mandates electronic stamping on all application forms. If the stamp shows a time of up to 3pm, you get to invest at the same day’s net asset value (NAV). But it is after 3pm, you will get the NAV of the next day. For liquid funds, if you invest up to 12 noon you get previous day’s NAV and same day’s NAV if after 12 noon.
Why is it important?
Say, you travel a great distance to make it before 3pm and invest in the nick of time. The next day the market rises sharply and you would expect to make gains. But your account statement shows that you made investments the next day (when equity market had already appreciated). Your time-stamp is your proof of the time and day of your actual investment.
What’s the cut-off time?
The cut-off time for equity funds and all other debt funds other than liquid funds is 3pm. For liquid funds, the cut-off time is 12 noon. Most online brokerages would advance their cut-off times by around an hour since they are intermediaries and need to send your details to fund houses within the official cut-off time.