Since 1st April 2003, in India, pay-ins happen on the next working day following the trading day, within 24 hours. This is the standard norm which is followed in India to streamline payments or delivery of stocks and shares to the exchange. Read on to know about the various aspects of a pay-in day.
Basic information about settlement datesWhenever a transaction (T) happens, the settlement date is set at maximum two working days from pay-out days, commonly referred to as T+2. Here T refers to transaction whereas 2 refers to the number of days taken for the completion of the exercise.
Though it varies from stock to stock, it is usually not more than two days from the date of transaction. While earlier it was T+3, since 1st April 2003, the delivery timings have been reduced to 24 hours. This has significantly reduced the time taken for the delivery of stock on exchanges, benefitting both the broker and the shareholder.
While it results in quick selling of shares for the holder, the same means the broker can earn his commission at the earliest.
What happens if when payments are not made on the pay-in day?In case the shareholder fails to make a payment to his stockbroker, then the stockbroker has the freedom to close the transactions by selling shares before the execution of a contract. In some cases, the Stock Exchange fixes the settlement period unless the investor already has an identical credit with the broker.
What happens to the shortages?Shortages can arise if the shareholder fails to make payments on the pay-in day. In such undesirable situations, these shortages are fulfilled through the auction process and the price difference is recorded in the Contract note.
The price received through auction is paid by a Stock Exchange member and consequently, he/she has full authority to recover from the client. Any loss in transactions is subtracted from the margin money paid by the investor.
What is to be done when accounts do not reflect the shares that are credited?The chances for these are low. As nowadays, pay-in days and pay-out days are fully automated, hence the chances of such occurrences are fewer. However, in case it happens you should contact the broker. The broker who will turn contact the concerned authority and will attempt to resolve the issue.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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