The Journey of money to Mutual funds

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New users are rightly curious about how their money is transferred between bank accounts and mutual funds. In the spirit of complete transparency,  we thought of addressing every little thing to avoid any confusion amongst our users.

Let’s begin with a table that summarises the timelines involved, and then move on to the details of the process.

INVESTMENT VIA AUTO PAY ( E MANDATE)

Time of TransactionAccount Debit DateNAV DateDashboard UpdateConfirmation from Mutual Funds
Before 1PM on a business day ^Same daySame dayIn 3 business daysWithin 5 business days after NAV date
Non-business day or after 1PM on a business day ^Same dayNext business dayIn 3 business daysWithin 5 business days after NAV date
Monthly PG-SIPSame daySIP date or next business day ( if SIP date is a non-business day)Upto 3 business days from SIP dateWithin 5 business days after NAV date

INVESTMENT VIA AUTO PAY ( E MANDATE)

Before 1 PM on a business day ^1-2 business daysSame day*Upto 3 business daysWithin 5 business days after NAV date
Non – business day or after 1PM on a business day ^2-3 business daysNext business day*Upto 5 business daysWithin 5 business days after NAV date
Monthly auto-pay SIP1-2 business days (2-3 business days if SIP date is a non-business day)SIP date or next business day ( if SIP date is a non-business day)*Upto 3 business days from SIP dateWithin 5 business days after NAV date
For investments in liquid funds or investments greater than Rs. 2 Lakh, mutual fund companies take 1-2 extra days to process the investment,
^ The cut off for all the funds is 12 PM temporarily from 7th April 2020 till further notice as per the revision of trading hours by RBI.

REDEMPTION

Time of TransactionNAV DateAccount Credit DateDashboard UpdateConfirmation from Mutual Funds
Before 1 PM on a business day ^Same dayDebt MFs – 1-2 business daysIn 3 business daysWithin 5 business days after NAV date
Non – business day or after 1PM on a business day ^Next business dayEquity MFs – 3-5 business daysIn 3-5 business daysWithin 5 business days after NAV date


Now if we further diversify it in detail,

You can invest through three different modes of payment on Niyo Wealth – Debit card, UPI, and Auto-pay (e-mandate). When you make investments through these modes, your money reaches the Mutual Funds with slightly different timelines.

Note that irrespective of how you choose to invest, the money is never held in Niyo Wealth’s bank account and goes directly from your account to the mutual fund company’s account through an RBI-approved payment gateway appointed by Niyo Wealth.

A. Debit card/UPI – This option is available for one-time (lump sum) investments and SIP investments as well if auto-pay is not enabled. When you choose the UPI/debit card option and click on the Confirm button, you will be redirected to  pay via debit card/UPI. Here, you can securely make the payment, just like any other e-commerce transaction. When you complete the payment, you will see a single debit from your account for the total amount you are investing, rather than separate debits for each Mutual Fund.

The money will be debited from your account as soon as you pay through debit card/UPI, and you will receive an alert from your bank. 

You will see the debit transaction listed in your bank statement as a debit to the payment gateway (and not to the Mutual Funds). The payment gateway then disaggregates the total and transfers the money to each separate Mutual Fund.

If the payment fails and the money is debited, it will be refunded to your bank account in upto 10 business days.

The actual allotment of Mutual Fund units happens either on the same day (if the payment was made before a certain cut-off time on a business day) or on the next business day (if the payment is made after the cut-off time, or on a non-business day).

Once the Mutual Fund Company has executed your investment (i.e. you have been allotted Mutual Fund units), it will communicate the transaction confirmation to Niyo Wealth in the next 3-5 business days. We will update the investment on your Niyo Wealth’s dashboard on the same day that the Mutual Fund Company sends us the confirmation.

Each individual mutual fund will then send you a transaction confirmation, via email and/or SMS, with details of Investment Amount, Units Purchased, and the corresponding Net Asset Value (NAV) within 5 business days after executing the transaction at their end. There may be rare exceptions where due to a network failure this communication may not go. There is no need to worry in these cases as you can always check the transaction status on your Niyo app.

When you make an investment, this timeline will be shown to you right there in the app too (image below). You will be able to see it 

B. Auto-pay (e-mandate) – The auto-pay facility allows Niyo Wealth to request your bank to debit your account on your behalf for the transaction amount requested by you. It works similarly to the authorization you give a bank to auto-debit monthly EMIs from your account for, say, a home loan repayment.

You can register your e-mandate in just a few clicks in your Niyo Wealth app through the Bank Details and Auto-pay section.

When you invest through your e-mandate (whether lump-sum or for monthly SIP), Niyo Wealth, through its RBI-approved payment processor, sends a debit request to your bank. Again, even if there are multiple mutual fund investments, there is a single, consolidated debit from your bank account.

For one-time payments (lump sum), the debit request is sent to your bank on the day you initiate the transaction.

Your account will be debited 1-2 business days after the request is sent to your bank. Mutual Fund units will be allotted according to the NAV for the day that the Mutual Fund processes your investment. This is usually the same as the day the investment is made by you or the next business day if you invested after cut-off. However, if your investment amount is greater than Rs. 2 Lakhs, the allotment of Mutual Fund units may take 1-2 additional business days.

Monthly SIPs work slightly differently. To execute the SIP on the scheduled date, Niyo Wealth automatically sends a debit request to your bank on the scheduled SIP date.

For example, if you have set up your SIP investments to execute on the 7th of every month, Niyo Wealth will forward the debit request to your bank on the 7th (assuming the 7th is a business day), so that your account gets debited on the 7th. You will be allotted Mutual Fund units as per the NAV on the 7th. If the 7th is not a business day, then the debit and the allotment of units will happen on the next business day. As in the case of one-time investments through NACH, allotment of Mutual Fund units (and the corresponding NAV) may take 1-2 extra business days if your investment amount is greater than Rs. 2 Lakh.

In this case as well, the money goes via the payment processor, which then splits the aggregate amount and directly transfers it to each individual Mutual Fund.

Similar to net banking investments, once the mutual fund company has processed your investment (i.e. you have been allotted Mutual Fund units), it will communicate the transaction confirmation to Niyo Wealth on the next 3-5 business days. We will update the investment on your Niyo Wealth dashboard on the same day that the Mutual Fund company sends us the transaction confirmation.

Each individual Mutual Fund will also directly send you a transaction confirmation, via email, with details of Investment Amount, Units Purchased, and the corresponding Net Asset Value (NAV) within 5 business days after executing the transaction.

Whenever you initiate a request to redeem (withdraw) your investments with a Mutual Fund through Niyo Wealth, the Mutual Fund transfers the money directly into your bank account currently listed with Niyo Wealth.

Once you initiate the redemption request, the credit will be received in your account in 1-5 business days, based on the time of day you submitted the transaction, and the type of Mutual Fund (Equity or Debt).

If the redemption is initiated before a certain cut-off on a business day, the mutual fund company will process your request on the same day. If the redemption is initiated after the cut-off, your request will be processed by the Mutual Fund company on the next business day. For debt mutual funds, this time period is usually 1-3 business days, while in the case of equity Mutual Funds, it takes between 3-5 business days.

The NAV assigned to this transaction would be the NAV of the date that your redemption request is processed by the Mutual Fund Company. Once your redemption request is processed by the Mutual Fund, they will initiate the transfer of funds to your account.

For example, if you initiate a redemption at 4 PM on Monday, August 10, 2020, it will be processed by the Mutual Fund on Tuesday, August 11, 2020 (since it is after the cut-off time). Correspondingly, your Mutual Fund units will be redeemed as per the NAV on August 11, 2020. 

This timeline too you will be able to see in the app the same way that you can see the investment timelines.

Each redemption transaction will reflect in your bank statement as a credit from the respective mutual fund company.

Once the mutual fund company has processed your redemption request, it will communicate the transaction confirmation to Niyo Wealth on the next business day. We will update the redemption on your Niyo Wealth dashboard on the same day that the Mutual Fund company sends us the transaction confirmation. In some cases, this can happen before the money has actually reached your bank account.

Each individual mutual fund will also directly send you a transaction confirmation, via email and/or SMS, with details of redemption Amount, Units Purchased, and the corresponding Net Asset Value (NAV) within 5 business days after executing the transaction. 

Now that we have helped you with the nitty-gritties of the process you can start investing and know-how and where your money is traveling. Niyo Wealth is here for the best experience with your investment.

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