HDFC Mutual Fund has introduced ‘Insta Access’ or instant redemption on HDFC Liquid Fund allowing investors to get their money faster than before. Ordinary redemptions from liquid funds take one business day to get electronically credited to bank accounts. This facility had previously been offered by several mutual funds for their ultra-short term funds but this had to be changed following new SEBI rules.
Several mutual funds launched ‘instant redemptions’ giving you money (up to a limit) within minutes rather than a day. However, these mutual funds offered instant redemption on their ‘ultra short-term bond funds’ because of the higher yield earned by these funds. SEBI came out with a set of rules on 8th May 2017 mandating that the facility could only be offered on liquid funds. The regulator also reduced the upper limit of such redemptions to Rs 50,000 or 90% of the value of the liquid fund holding, whichever is lower. HDFC Mutual Fund’s Insta Access facility offers exactly these terms. It also has a minimum limit of Rs 5,000.
The facility uses Immediate Payment Service (IMPS). It will only be offered to resident individuals who have registered their bank account with the fund along with its IFSC number. Their bank account must also allow IMPS. You can submit the redemption request on HDFCMF Online.
Which NAV applies?
In case of requests before 3 pm, the lower of the NAV of the same day or the previous day applies. In case of the request after 3 pm, the lower of the NAV of the same day or the next day applies. However, in all cases, the credit to your bank account will be ‘instant.’
Any other options?
ICICI Prudential Mutual Fund offers its version of this feature called iSave-iPru MF. It also allows instant redemptions up to Rs 50,000 or 90% of the fund value, whichever is lower. The facility is offered on the ICICI Prudential Liquid Plan Growth Option. Its minimum redemption amount is lower than HDFC MF’s at just Rs 500.
DSP Blackrock Mutual Fund offers a similar facility on the DSP Blackrock Liquidity Fund. Reliance Mutual Fund had initially offered this facility on Reliance Money Manager Fund but has indicated that this would change to a liquid fund. Reliance Mutual Fund also has a debit card (in association with HDFC Bank and Visa) which lets you withdraw up to Rs 50,000 per day from ATMs or 50% of your balance in its liquid fund, whichever is lower. You can also make purchases on the card for up to Rs 1 lakh or 50% of your balance in the fund, whichever is lower, per day.