Mutual Fund Redemption Timeline: When Your Money Arrives

You tap Redeem on the app at 11 a.m. on a Monday and the confirmation says the request is placed. Then the reasonable question arrives: when does the money actually hit my bank account? The answer is not a platform policy or an AMC courtesy — it is a statutory clock that SEBI enforces, and once you know how it ticks, redemption stops feeling like a black box.

This post walks the whole journey: what T is, how many working days T+3 really means, the carve-out for overseas funds, the instant option for liquid funds, the things that quietly delay payouts, and exactly what to check when day four arrives and the money has not.

The statutory clock: three working days

The rule is short. Once your redemption request is received, the fund must transfer the proceeds to you within three working days. For schemes that invest at least 80% of their total assets in permissible overseas investments, the window is five working days — those funds actually have to sell foreign assets and bring the money home, so SEBI gives them two extra days. Source: SEBI Master Circular for Mutual Funds as on March 20, 2026, paragraphs 15.3.1-15.3.2, which consolidates circular SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022.

If the request is for the IDCW (dividend) option, the payout must reach you within seven working days from the record date. Source: SEBI Master Circular for Mutual Funds as on March 20, 2026, paragraph 12.4.

Note the words working days. Weekends and market holidays do not count. Redeem an equity fund on a Friday afternoon and your three days are Monday, Tuesday, Wednesday — money by Wednesday, not by Monday evening. A redemption just before a long weekend stretches further, which is worth remembering when you are timing a down payment.

What T actually is: cut-offs decide which day you start

T is the day your request is time-stamped — but only a valid request counts, and validity is where the cut-off lives. The clock for the money transfer starts from the date of redemption; which NAV you get depends on when the request landed.

The current cut-off table, straight from SEBI's master circular:

Source: SEBI Master Circular for Mutual Funds as on March 20, 2026, paragraph 9.4; the 7:00 p.m. online window for overnight funds came in via SEBI circular SEBI/HO/IMD/PoD2/P/CIR/2025/56 dated April 22, 2025, effective June 1, 2025.

Two wrinkles people miss. First, for liquid and overnight funds the applicable NAV follows the category's own convention — the closing NAV of the day immediately preceding the next business day — so a Monday-morning redemption gets Monday's liquid NAV, and a Monday-evening one gets Tuesday's. Second, the 3 p.m. figure you often see attached to the 1:30 p.m. liquid-fund rule belongs to purchases, not redemptions: since February 2021, your purchase gets that day's NAV only if your money actually lands in the fund's bank account before 3 p.m. (1:30 p.m. for liquid and overnight funds) — placing the order is not enough. Source: AMFI's cut-off guidance summarising SEBI circulars of September 17 and December 31, 2020, effective February 1, 2021. On the redemption side there is no funds-realisation test — your request's time stamp is what matters.

Liquid, overnight and equity funds: three different rhythms

The three-day clock is the same for everyone; the experience of waiting is not. Liquid and overnight funds are built around near-cash use, and they come with an option that equity funds simply do not have.

The Instant Access Facility (IAF) lets you pull money out of a liquid or overnight fund and have it credited to your bank account on the same day you place the request. The rules: it runs only through the online mode, only for resident individual investors, and is capped at ₹50,000 or 90% of the latest value of your holding in that scheme, whichever is lower — per day, per scheme. Source: SEBI Master Circular for Mutual Funds as on March 20, 2026, paragraph 15.11, implementing SEBI circulars of May 8, 2017 and July 30, 2021.

So the practical ladder looks like this:

• Overnight fund, online request: same-day credit via instant access within the ₹50,000 cap, or normal T+3 beyond it.
• Liquid fund: same-day credit up to the instant cap; the rest follows T+3.
• Equity or hybrid fund: T+3, no instant option. If the money must absolutely be there today, an equity fund is the wrong parking spot.

One honest caveat on instant access: it is a facility, not a right. SEBI's rules allow AMCs to suspend IAF in stressed situations, and any suspended request is then processed as a normal redemption. Source: SEBI Master Circular for Mutual Funds, paragraph 15.11(d).

How a redemption actually flows, step by step

On a platform (Groww, Zerodha Coin, Paytm Money and similar): you select the folio, enter units or amount, confirm, and the platform passes the instruction to the AMC's registrar — CAMS or KFintech for the vast majority of fund houses. The RTA time-stamps it, the NAV is struck per the cut-off table, and the payout instruction goes to the fund's bank.

Directly with the RTA: if you hold funds across multiple AMCs, you can redeem without any app. CAMS (camsonline.com) and KFintech (mfs.kfintech.com) both accept online redemption requests for the schemes they service — log in with your PAN, or use the quick-transact flows with just folio number and registered details. MF Central, the joint CAMS-KFintech portal, shows all your holdings and is a good place to check what actually happened when something stalls.

Directly with the AMC: every fund house's website accepts redemptions after a login keyed to your PAN. This is also the fastest route when a platform is down on a heavy-sell day.

In all three routes the back office is the same: time-stamp → NAV strike → payout to your registered bank account through NEFT/RTGS/IMPS. Proceeds cannot go to a different account — which is exactly why most delays happen.

What slows a redemption down

• Bank account mismatch. The payout goes only to the bank account registered against your folio. Closed the account? Changed banks and never updated it? The money bounces back and the re-issue cycle eats a week.
• KYC status. If your KYC is stuck at "on hold" or "under validation" at the KYC Registration Agency, the redemption request itself can be rejected outright — check your status on your AMC's or RTA's KYC page before you need the money. Source: LIC Mutual Fund KYC FAQ (status-wise transaction permissions), accessed November 3, 2026.
• Frozen or restricted folios. Signature mismatches, a minor who has turned major (no further transactions until the folio is converted with fresh KYC and bank details), or pending documents freeze processing. Source: SEBI Master Circular for Mutual Funds, paragraph 15.13.3.
• Death claims and nominee issues. Where a holder has died and nomination records are incomplete, the transmission process adds paperwork — death certificate, legal-heir proofs — before any redemption can run.
• Exceptional circumstances. AMFI, in consultation with SEBI, publishes a list of exceptional situations — system outages, natural calamities and similar — under which AMCs get extended timelines. Source: SEBI Master Circular for Mutual Funds, paragraph 15.3.3; AMFI circular of January 16, 2023.
• Cut-off illusions. Some platforms show a cut-off earlier than 3 p.m. because they batch instructions; a request placed at 3:20 p.m. genuinely misses the day's NAV.

Day 4 and the money still has not arrived

Work the checklist in this order — it resolves most cases without a single phone call.

1. Confirm the request actually went through. Check for the AMC's own confirmation (email/SMS from the AMC or RTA, not just the app screen). If there is no AMC-side confirmation, the instruction never reached the RTA — chase the platform first.
2. Count working days, not calendar days. A weekend or a settlement holiday resets your math. Day four must be the fourth working day after T.
3. Check the NAV date on the confirmation. If the request was stamped after 3 p.m., your T is the next business day — the whole clock shifts with it.
4. Check the bank account on the folio. If the registered account is closed or dormant, the payout bounced. Fixing the bank mandate is the single most common repair.
5. Check your KYC status on the KRA/AMC page. An "on hold" status blocks transactions and explains a silent rejection.
6. Escalate. After the third working day, the delay is a violation, not a queue: raise a complaint with the AMC (they must acknowledge and resolve within timelines under SEBI's grievance-redressal framework), then on SEBI's SCORES portal, and finally through SEBI's ODR portal if unresolved. You do not need to request the interest — see below.

When the AMC is late: the 15% penalty

Missing the deadline costs the fund house real money. If redemption proceeds are not transferred within three working days (five for overseas-heavy schemes), or IDCW within seven, the AMC must pay interest at 15% per annum for the delay period, out of its own pocket, along with the proceeds — and it must inform you of the rate and amount paid. Source: SEBI Master Circular for Mutual Funds as on March 20, 2026, paragraph 15.4.1, implementing the November 25, 2022 circular.

The arithmetic is small but the principle is not: on ₹2 lakh held up for three extra days, 15% p.a. works out to roughly ₹247. The interest is automatic — it is supposed to arrive with the payout, not after you fight for it. If money goes unclaimed for 90 days, AMCs must move it to a dedicated unclaimed-amount scheme where the AMC's fee is capped at 50 basis points and no exit load applies. Source: SEBI Master Circular for Mutual Funds, paragraphs 15.5.2-15.5.4.

The takeaway

Three working days is the law, five for funds that are mostly invested abroad, same day for small liquid-fund withdrawals under instant access, and 15% a year if the fund house is late. Set the cut-off-aware expectation — request before 3 p.m., money on T+3 — keep your bank account and KYC current, and the redemption experience will be boring in the best way. For how redemption interacts with exit loads, FIFO tax lots and the 12-month LTCG line, read our mutual fund taxation guide; for where redemption fits in the bigger picture, start with the complete mutual funds guide for 2026.

This is educational content, not investment advice. Consult a SEBI-registered advisor for decisions specific to your situation.