On June 4, a serious glitch disrupted the mutual fund investments of numerous investors using online platforms such as Zerodha and Groww. Despite purchasing their mutual funds before the cut-off time, these investors discovered they were allocated the Net Asset Value (NAV) for June 5 instead of June 4, leading to significant financial losses.
In a social media post shared on X one of the investors shared the email reply by Groww stating “It acts solely as a platform for order placement and the entire process of fund collection, order placement, and allocation is managed directly by BSE.
BSE places the order with AMC once they receive payment confirmation from the banks within the cut-off time.” In another post it was shared that there was a delay in fund reporting from the payment aggregator to the Indian Clearing Corporation (ICCL), which is a wholly-owned subsidiary of BSE and carries out the functions of clearing and settlement. This discrepancy compelled many investors to receive the following day’s NAV, after the market had already rebounded by 3%, when the previous day on June 4, Nifty index fell by 6%.
However, BSE has clarified that there was no technical glitch from the exchange side. “There was no technical glitch at the exchange end on 4th June. However, there was some lag in receiving payments from UPI channel for a few customers.”
Investors found themselves in a whirlwind of blame-shifting among brokers, the Bombay Stock Exchange (BSE), and the payment aggregator involved. Notably, there was even a discrepancy between Exchange-Traded Fund (ETF) prices and their NAVs, adding to the chaos and confusion.
According to Securities and Exchange Board of India (Sebi) guidelines, the cut-off time for purchasing and switching mutual funds is crucial: 1 PM for Liquid and Overnight funds, and 2:45 PM for Non-Liquid funds. However, meeting these deadlines isn’t just about completing your transaction; the funds must also reach the Asset Management Company (AMC) within this time frame.
For ensuring a same-day NAV, it is safest to buy directly from the mutual fund websites or apps. The CAMS app states “While some major banks are technically enabled to provide real time credit, not all payment aggregators/AMC may be integrated with all the banks. In such a cases the date of credit to the MF account and unit allotment will happen on T + 1. Unit allotment will be subject to receipt of funds in the mutual fund account before the applicable cut off time of 3 pm.”
Investors are also advised to use the same bank account linked to their mutual fund folio. Using a different account can lead to transaction suspensions that often require offline rectification, complicating the process further. Leveraging UPI IDs from the same bank or using BHIM IDs over aggregator IDs like GPay, PhonePe, and Paytm can also reduce the risk of such issues in future.
The June 4 incident is an eye-opener, highlighting the necessity for seamless coordination among all parties involved in mutual fund transactions to prevent future mishaps.