Important: This article, has been modified due to a newly introduced regulation. Please view the amended article here
SEBI mandates stockbrokers to settle (transfer available credit balance from Trading account to Bank account) the client’s unused fund balances lying in the trading accounts.
Based on this SEBI circular, brokers are now required to conduct the settlement of funds based on 2 criteria;
A) SEBI's Monthly settlement criteria: If the client has not traded for 30 days, all the funds lying in the client's account shall be returned to client's registered bank account, after adjusting for retainable fund balances.
B) SEBI's Quarterly settlement criteria: Within a period of 90 day's, if the clients fund balance has not been settled even once (Has had a zero or a debit funds ledger balance) then at the end of the 90 days the broker is required to settle (transfer available credit balance from Trading account to Bank account) the client’s registered bank account, after adjusting for retainable fund balances.
Mode of settlement of funds to clients bank account:
The SEBI Circular also states that incase, the broker is required to transfer funds to clients bank account via RTGS / NEFT for conducting monthly / quarterly settlement. In case there are any difficulties is remittance of funds to clients via RTGS / NEFT the broker needs to resort to settling the account by issuing a "physical payment instrument" (ie. cheque , DD etc.) to the client and also it should get cleared within the timelines of monthly / quarterly settlements.
Settlement process at PM Securities
Refer to this article to understand the process that shall be followed at PM Securities to adhere with the above guidelines.
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