Settlement Cycle — T+1, Pay-In, Pay-Out
India moved from T+2 to T+1 rolling settlement in Jan 2023 (phased), and is testing T+0 same-day since Mar 2024. In T+1: Trade on Day T → Pay-In (cash from buye...
T+1 Settlement Cycle
India moved from T+2 to T+1 rolling settlement in Jan 2023 (phased), and is testing T+0 same-day since Mar 2024. In T+1: Trade on Day T → Pay-In (cash from buyers, securities from sellers) by 11 AM on T+1 → Pay-Out (cash to sellers, securities to buyers) by 1:30 PM on T+1. Failure triggers auction.
On trade day T, the CC computes net obligations overnight. By morning of T+1: selling clients deliver securities to Pool; buying clients' funds are debited from Client Bank Account. CC then pays out: cash to selling clients, securities to buying clients. If a seller fails to deliver (short delivery), CC auctions the shortage on T+1 afternoon — market buys on auction day up to 20% above close price or at close +20% (whichever higher). India is the first major market to try T+0 (same-day) for select stocks — from March 2024 on Nifty-50 stocks in a separate window. T+0 drastically reduces counterparty risk but requires real-time margining.
Trade today, settle tomorrow
Same-day settlement for Nifty-50 from Mar 2024
Short delivery → CC buys at auction next day
11 AM collect, 1:30 PM distribute on T+1
A Practical Example
Tuesday 14:30 — Ravi buys 100 RIL @ ₹2,400 via Zerodha. Wednesday morning:
• 10:45 AM — Ravi's bank debited ₹2,40,000 (+ charges) and moved to Zerodha Client Bank → to Clearing Bank → to NSCCL
• 11:00 AM — Pay-In completes
• 13:00 PM — NSCCL debits the selling counterparty's pool account by net shares
• 13:30 PM — Pay-Out: 100 RIL credited to Ravi's Zerodha demat at CDSL; ₹2,40,000 credited to seller's bank
• By end of T+1 — Ravi can see 100 RIL in his demat, sell them on T+2 if he wants
What Makes This Important
Frequently Asked Questions
Shorter settlement cycles reduce counterparty risk, capital needs for margins, and time-to-settlement exposure. T+1 also modernises infrastructure (real-time risk) which is a pre-requisite for T+0. India is ahead of most major markets on this.
🧠 Quick Quiz
2 questions to check your understanding