Quick access to money is one of the main reasons investors consider liquid funds for short-term requirements. However, the time taken to receive the money depends on the redemption route, the time of the request and whether the scheme offers instant redemption.
Knowing the liquid fund redemption time and the applicable NAV rules can help you plan withdrawals without leaving them until the last minute. This article explains how liquid fund redemption works, the available withdrawal methods, and the factors to check before submitting a request.
How the mutual fund redemption process works
Liquid funds are debt mutual funds that invest in debt and money market securities maturing within 91 days. Their short maturity profile supports easy access to money, but investors still need to understand the applicable redemption process, NAV rules and settlement timelines. Here’s how the redemption process works:
- Submit a redemption request: Choose the scheme and enter the amount or number of units you want to redeem.
- Request is time-stamped: The date and time of submission determine which NAV applies.
- Applicable NAV is determined: NAV is the per-unit value of the scheme. For an amount-based request, it determines how many units are redeemed. For a unit-based request, it determines the amount received.
- Units are cancelled: The fund house deducts the redeemed units from your holding. Any applicable exit load is also deducted.
- Money is transferred: The redemption proceeds are sent to the bank account registered with your folio.
How to redeem liquid funds online
Liquid funds can generally be redeemed through the AMC’s website, its investor portal, a registrar and transfer agent or an authorised investment platform:
- Log in using your registered details
- Select the fund
- Choose a full or partial redemption
- Enter the amount or number of units
- Select standard or instant redemption, where the facility is available
- Verify the registered bank account and complete the required authentication
- Submit the request and retain the transaction reference
If the units are held in demat form, the redemption may need to be initiated through the platform or depository participant where they are held.
Understanding the liquid fund redemption time and applicable NAV
The applicable NAV determines the value of the units being redeemed, while the settlement timeline indicates when the proceeds are expected to reach the bank account. These are separate parts of the redemption process.
Standard redemption timeline
The liquid mutual fund redemption time depends on the scheme, request timing, bank processing and holidays. Under SEBI rules, most domestic mutual fund redemption proceeds must be transferred within three working days of a valid request, except in specified circumstances. Some fund houses offer instant redemption, subject to scheme limits, registered bank details and payment-system availability. Amounts above the limit follow standard timelines.
Cut-off time and applicable NAV
The cut-off time determines which NAV will be used to calculate your redemption amount:
- Request received by 3 p.m.: If the following day is a business day, the same day’s closing NAV applies.
- Request received after 3 p.m.: The next business day’s closing NAV applies.
- Request before a weekend or holiday: The NAV of the calendar day immediately before the next business day applies. For example, a request submitted before 3 p.m. on Friday will usually receive Sunday’s NAV if Monday is the next business day.
Liquid funds calculate NAV for calendar days, which is why a weekend NAV may apply.
What happens in case of instant redemption?
Some fund houses offer instant redemptions for liquid funds, where the eligible amount is credited within minutes. The fund compares two NAVs and uses the lower one to calculate the units redeemed:
- Request received by 3 p.m.: The previous calendar day’s NAV is compared with the request day’s NAV.
- Request received after 3 p.m.: The request day’s NAV is compared with the next calendar day’s NAV.
This means the money reaches the investor’s bank account first, while the exact number of units redeemed is determined later. The facility is limited to ₹50,000 or 90% of the investment value, whichever is lower, per investor per scheme per day. Any additional amount follows the standard redemption process.
Factors that can affect the timeline
The time taken to receive the money may be affected by:
- Weekends and mutual fund or banking holidays
- Requests submitted after the cut-off time
- Incorrect or inactive registered bank details
- Additional verification requirements
- Processing timelines followed by the investment platform
- Exceptional banking, market or operational disruptions
Points to check before redeeming liquid funds
Before submitting a request, check the factors that could affect the amount received and the time taken to receive it:
- Decide how much to redeem: Choose between a partial redemption and withdrawing the entire investment. A partial redemption allows the remaining units to stay invested.
- Select the redemption route: Check whether you need standard redemption or are eligible for instant redemption. The latter is subject to the scheme’s limits and terms.
- Check the cut-off time: The time and day on which the request is submitted determine the applicable NAV and may affect the payout timeline.
- Review the exit load: A graded exit load may apply if liquid fund units are redeemed within the first few days after allotment.
- Consider the tax implications: Any capital gain arising from the redemption may be taxable under the prevailing rules. As of FY 2026-2027, all capital gains from debt fund units purchased after April 1, 2023, are considered short-term and taxed as per the investor’s income tax slab (plus applicable surcharge and cess).
- Verify the registered bank account: Redemption proceeds are transferred to the bank account linked to the mutual fund folio. Incorrect or inactive account details may delay the payment.
The tax information in this article is based on prevailing laws at the time of publishing the article and is subject to change. Please consult a tax professional or refer to the latest regulations for up-to-date information.
Why consider Bajaj Finserv Liquid Fund?
Bajaj Finserv Liquid Fund invests primarily in debt and money market instruments maturing within 91 days. Its short portfolio maturity seeks to provide liquidity and relative stability while generating market-linked return potential.
The scheme offers a standard T+1 settlement timeline and an instant redemption facility of up to ₹50,000 or 90% of the investment value, whichever is lower. It may be considered for parking surplus cash, meeting planned short-term expenses or maintaining part of an emergency corpus.
Before investing, review the scheme’s investment objective, Riskometer, Potential Risk Class, exit load, expense ratio and latest portfolio. To read more about the scheme and view statutory details, visit the Bajaj Finserv Liquid Fund scheme page.
How to invest in Bajaj Finserv Liquid Fund
You can invest in Bajaj Finserv Liquid Fund through a distributor or the Bajaj AMC website.
To invest online:
- Visit the website: Go to the home page and click on the user icon at the top of the page. You will be redirected to the investor portal.
- Log in or register: Enter your PAN and log in to your existing account or create a new one.
- Complete onboarding or KYC: If your KYC status is validated, complete the short onboarding process. Otherwise, complete the applicable KYC requirements first.
- Select the scheme: Choose the scheme from your account home page.
- Choose an investment method: Select either a lumpsum investment or an SIP and enter the investment amount.
- Review and pay: Check the investment details, confirm the transaction and complete the payment.
Conclusion
Liquid funds can provide a practical way to manage surplus money while retaining access to it for short-term needs. Standard redemption generally follows a short settlement cycle, while the instant-redemption facility can provide quicker access to an eligible portion of the investment.
Check the cut-off time, applicable NAV, exit load and registered bank details before placing a request. Understanding the liquid fund redemption time in advance can help ensure that the money is available when it is required.
FAQs
What is a fund’s liquidity?
A fund’s liquidity refers to how easily its units can be redeemed and converted into money. Liquid funds generally offer redemption on business days, while some schemes also provide a limited instant-redemption facility.
What benefits may investors expect from liquid funds?
Liquid funds offer high liquidity, a short maturity profile and relatively lower interest-rate sensitivity than longer-duration debt funds. They may be used for surplus cash, near-term expenses or part of an emergency corpus.
How do I choose a liquid fund?
Compare the fund’s credit quality, issuer concentration, expense ratio, exit load, Riskometer, Potential Risk Class and redemption facilities. The scheme should also match your investment period and liquidity requirement.
What is the liquid fund redemption time?
Standard redemption from a liquid fund is commonly settled on a T+1 basis, subject to the scheme’s terms and intervening holidays. Eligible instant-redemption requests may be processed within minutes, up to the permitted limit.
How does SEBI regulate liquid funds?
SEBI defines liquid funds as schemes investing in debt and money market instruments maturing within 91 days. It also prescribes requirements covering valuation, liquidity, disclosures, instant redemption and the transfer of redemption proceeds.
Can I use liquid funds for emergency funds?
Liquid funds may be used for part of an emergency corpus because they offer relatively quick access to money. However, it may be sensible to retain some money in a bank account for expenses requiring immediate and unrestricted access, since instant redemption from a liquid fund is subject to a limit.
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