Instant Access Facility
Also written IAF · Instant Access Facility (IAF)
A facility that credits redemption proceeds to a resident individual investor's bank account on the same day, offered only in overnight and liquid schemes and only through the AMC's own website or app.
In plain language
A normal redemption is a promise of money in a few working days. The Instant Access Facility turns it into money now — the proceeds reach the investor's bank account on the same day the redemption request is made, subject to the prescribed limits.
The trade for that speed is the price. IAF does not use the NAV a normal redemption would use; it uses the lower of two NAVs. The investor pays for immediacy in basis points.
The facility is tightly fenced. Only overnight and liquid schemes may offer it, only resident individual investors may use it, and only through the website or mobile app of the AMC — not at a counter, not through a distributor's form.
How it works
The pricing rule sits inside the liquid-fund row of the cut-off table, and it has two halves. The relevant cut-off time for liquid fund redemptions is 3.00 pm.
Request received up to the cut-off time — applicable NAV is the lower of:
- (a) the NAV of the previous calendar day, and
- (b) the NAV of the calendar day on which the application is received.
Request received after the cut-off time — applicable NAV is the lower of:
- (a) the NAV of the calendar day on which the application is received, and
- (b) the NAV of the next calendar day.
Both halves work on calendar days, not business days, which is only possible because mutual funds must calculate NAV for every calendar day for liquid schemes. In a rising liquid-fund NAV — and a liquid fund's NAV rises almost every day, because the movement is mostly interest accrual — the "lower of" rule reliably means the earlier of the two days.
A worked example
Mrs Deshpande holds 1,240 units of a liquid fund. She needs cash on Wednesday and puts in a request at 11.00 am, before the 3.00 pm cut-off.
| Day | NAV per unit |
|---|---|
| Tuesday (previous calendar day) | Rs 3,880.2145 |
| Wednesday (day of receipt) | Rs 3,880.7712 |
She redeems 60 units.
Through IAF — the lower of Tuesday and Wednesday is Tuesday's Rs 3,880.2145:
60 × 3,880.2145 = Rs 2,32,812.87 credited the same day
Through a normal redemption — a liquid fund request received up to cut-off gets the closing NAV of the day immediately preceding the next business day, i.e. Wednesday's Rs 3,880.7712:
60 × 3,880.7712 = Rs 2,32,846.27 dispatched within 3 working days
IAF cost her Rs 33.40 for the privilege of having Rs 2.33 lakh on Wednesday instead of Monday. On an emergency that is cheap; as a habit on every redemption it is a standing leak.
Why NISM asks about it
Chapter 11 (Operational Concepts of Mutual Funds) carries IAF inside Table 11.1, the applicable-NAV table, with a footnote restricting it to overnight and liquid schemes. Chapter 14 (Financial Transactions) states the same-day credit and the resident-individual and website-or-app restrictions. The examinable points are the lower-of rule in both its before-cut-off and after-cut-off forms, and the list of restrictions — expect a question asking which schemes may offer IAF, or which NAV applies to an IAF request received after 3.00 pm.
Common exam traps
- IAF is not available in every liquid-adjacent scheme. Only overnight and liquid schemes. Ultra-short and money-market funds do not qualify.
- Resident individuals only, and only through the AMC's own website or mobile app. An NRI cannot use it; nor can an institution; nor can anyone walking into an ISC with a form.
- The rule is "lower of", never "later of" or "previous day". Before cut-off it compares the previous calendar day with the day of receipt; after cut-off it compares the day of receipt with the next calendar day.
- Calendar days, not business days. This is why liquid schemes must compute a NAV every calendar day.
- IAF is subject to prescribed limits — it is not a route to redeeming an entire folio instantly.
- The normal liquid-fund redemption rule is different: up to cut-off you get the closing NAV of the day immediately preceding the next business day. Do not apply the IAF comparison to a non-IAF request.
Where this is taught
- Series V-B · Chapter 9: Investor Servicesintroduced here
- Series V-D · Chapter 9: Investor Servicesintroduced here
- Series II-B · Chapter 11: Operational Concepts of Mutual Fundsintroduced here
- Series V-A · Chapter 9: Investor Servicesintroduced here
- Series X-A · Chapter 11: Mutual Fundintroduced here
- Series II-B · Chapter 14: Financial Transactions
Related terms
- Net Asset ValueThe net assets of a mutual fund scheme divided by the number of units outstanding — what one unit of the scheme is worth on a given day, after every liability except the unitholders' own.
- Cut-off timeThe SEBI-prescribed clock time that, read together with the time stamp on the request, decides which day's NAV a mutual fund transaction is priced at.
- Exit loadA charge levied when an investor redeems units, calculated as a percentage of NAV and deducted from it, usually only if the units are sold within a stated holding period.
- Official Point of AcceptanceA location a mutual fund has formally designated to receive transaction requests, where the application is time-stamped — and that stamp, not the moment the investor handed the form over, decides which NAV applies.
- Systematic Withdrawal PlanA standing instruction to redeem a set amount — or only the appreciation — from a mutual fund scheme at a chosen frequency, used to manufacture a regular income in retirement.