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Equity funds will shift to T+2 settlement

Jan 30, 2023

By: BlinkX Research Team

As all Indian stocks moved into T+1 settlement on Friday 27th January 2023, mutual funds effected a subtle shift. To synchronise with the new equity settlement cycle, mutual fund AMCs will reduce the settlement cycle for all equity funds from the current T+3 to T+2. If you give redemption request for equity fund before the cut-off time, then funds would be directly credited to your bank account on T+2 day.

Now, equity fund investors can realize their redemption money 1 day early. This move to T+2 redemption payment cycle for equity schemes will be effective from 01st February 2023 across all funds. As A. Balasubramanian, CEO of Birla Mutual Fund and AMFI chairman. summed it up, “Since mutual funds will get the benefit of T+1 in their equity dealings, the benefit is being passed on to the mutual fund unit holders by compressing the cycle to T+2. 

Here the cut-off timings have to be kept in mind for deciding on T+2. AMFI has already defined cut-off time of 3.00 pm on all business days. If the application for redemption is received at an authorized point of sale before 3.00 pm (time stamp has final say), it will be redeemed at same day NAV and proceeds will be credited on T+2 day. However, redemptions time stamped after 3 pm will use next day NAV and the T+2 will apply from the next day.

On Friday, 27th January 2023, the last set of 256 stocks were shifted to T+1 settlement cycle; officially making India a T+1 market. Henceforth, any shares bought or sold on T day would reflect in the demat account / bank account on next day (T+1). In sync with this move, the equity fund redemptions have officially moved from T+3 to T+2.