SEBI has now levied an exit load on liquid mutual funds to discourage frequent inflows and outflows by institutional investors who invest huge sums of money in such funds.
The exit load is only applicable for the first 6 days and is very small eg Rs 7/lakh so as to cause minimal adverse impact for non-institutional investors.
The new exit load rule will be applicable for all the investments made in liquid funds of all fund houses on or after 22nd October, 2019. The exit load penalty depends on the day you withdraw.
Here is a table summarising the new exit load rules for liquid Mutual Funds as per SEBI guidelines:
There will be no penalty if the withdrawal is made on or after 7th day from investment.
Since the impact of this rule is minimal for non-institutional investors, we continue to recommend liquid funds with instant redemption feature for our Emergency goal.
You can read about the SEBI announcement here.