Mutual fund (MF) investors have been given respite from the long weekend due to begin on September 29. The Association of Mutual Funds of India (AMFI: the MF industry’s trade body), is about to declare September 29 (Friday) as a business day. As per industry sources, this decision was taken earlier today (Thursday), though an official notification is yet to be released.
This means that those who had put in a redemption request on September 27 (Wednesday) will get their money on September 29, despite it being a bank holiday on account of Eid. Up until now, investors were in a tizzy due to the long weekend and because of the closure of equity and fixed income markets from September 28 (Thursday) to October 2 (Monday).
Earlier, September 28 was meant to be a holiday on account of Eid-E-Milad. However, due to Ganesh Visarjan (the last day of the Ganesh festival), the Maharashtra government decided to shift the public holiday to September 29 (Friday).
In other words, September 29 is now a bank holiday. Typically, a bank holiday is a non-business day.
The long weekend and the government’s last-minute decision to shift the bank Eid-E-Milad holiday by a day upset a few investors, who were counting on redemptions happening in the interim.
Redemption requests put in on September 27 should ideally materialise on September 29. But the last-minute shift in the public holidays, then a weekend and then another national holiday on October 2 (Gandhi Jayanti) meant that investors would have got their money only on October 3 (Tuesday). Keeping this in mind, on September 28, AMFI decided that September 29 would be a business day for MFs, despite it being a bank holiday.
This means mutual funds will be able to deploy money in the markets and even withdraw it to facilitate redemptions on September 29.
Meanwhile, due to the initial plan of declaring September 28 as the Eid-E-Milad holiday, fixed income markets and settlement systems remained shut on September 28, which was declared a non-business day (a non-business day is when MFs do not deploy any money in the fixed income markets nor facilitate any redemption). This, MF industry experts said, is irreversible, despite the bank holiday being pushed back by a day.
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