Funds Settlement
NSE Clearing has empanelled 15 clearing banks namely Axis Bank Ltd., Bank of India, Canara Bank, Citibank N.A, HDFC Bank, Hongkong & Shanghai Banking Corporation Ltd., ICICI Bank, IDBI Bank, IndusInd Bank, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India, Union Bank of India, YES Bank Limited and JP Morgan Chase Bank
Every Clearing Member is required to maintain and operate clearing accounts with any of the empanelled clearing banks at the designated clearing bank branches. The clearing accounts are to be used exclusively for clearing & settlement operations
Every clearing member shall maintain and operate a separate and distinct primary clearing account for the capital market segment with any one of the designated clearing banks at the designated branch of the bank. The primary clearing account shall be used for clearing and settlement operations i.e., for settling funds obligation, payment of margins, release and enhancement of collateral, EPI of funds, penal charges, etc as may be specified by the Clearing Corporation from time to time.
Further, every clearing member shall be able to additionally maintain and operate additional clearing account(s) with the designated clearing bank(s) other than in which primary account is maintained, for the purpose of enhancement of collaterals in the form of cash and for providing EPI of funds . Release of cash collateral, collateral enhancement and EPI of funds, shall be routed through the secondary clearing account of the member if specified by the member.
Clearing Members are required to authorise the Clearing Bank to access their clearing accounts for debiting and crediting their accounts, reporting of balances and other information as may be required by NSE Clearing from time to time as per the specified format. The Clearing Bank will debit/ credit the clearing account of clearing members as per instructions received from the Clearing Corporation.
A Clearing member can deposit funds into this accounts in any form, but can withdraw funds from these accounts only in self-name.
Clearing members shall not seek to close or de-activate the clearing account without the prior written consent of the Clearing Corporation
In case a clearing member wishes to shift the primary clearing account from one designated clearing bank to another, the following procedure shall be followed:
• The clearing member shall request the primary clearing bank in writing for issuing a No Objection Certificate (NOC) for shifting of the primary clearing account.
• The clearing member shall request the Clearing Corporation in writing seeking its permission for shifting of the primary clearing account and enclose the NOC received from the existing primary clearing bank in this regard or where the NOC is not received, furnish an acknowledged copy of the NOC request along with a declaration to the effect that no response has been received from the existing primary clearing bank in respect of the NOC request even after a minimum waiting period of a fortnight.
• The Clearing Corporation would thereon issue a letter of introduction to the other designated clearing bank
• On opening the clearing account with the other designated clearing bank, the clearing member shall submit to the Clearing Corporation the documents relating to the new primary clearing account issued by the clearing banks as mentioned in consolidated circular issued by NCL from time to time.
• The Clearing Corporation shall thereon communicate the date from which the new primary clearing account shall be operational. The clearing members are required to intimate the Clearing Corporation whether they wish to continue the existing primary clearing account as one of the additional clearing accounts or discontinue the existing primary clearing account after the change in primary clearing bank. In the event of the clearing members wishing to discontinue the existing primary clearing account, the Clearing Corporation shall communicate the date after which the existing primary clearing account may be closed by the clearing member.
• In the event of the clearing members wishing to continue the existing primary clearing account as one of the additional clearing account, the clearing member shall be required to provide the letter from clearing bank confirming continuance of account as additional clearing account along with the letter as mentioned in consolidated circular issued by NCL from time to time for such additional clearing account
Members are informed of their funds obligation for various settlements through the Obligations reports. The daily funds statement gives date-wise details of each debit/ credit transaction in the member’s clearing accounts whereas the bank summary statement summarizes the same information for a quick reference.
The member’s primary clearing account may be debited for various types of transactions on a daily basis. The member is required to ensure that adequate funds are available in the primary clearing account towards all obligations, on the scheduled date and time. Members may refer to their obligation statements and provide for funds accordingly. To ensure timely fulfillment of funds obligations, members may avail of the facility of standing instructions to transfer the requisite amount from some other account to the primary clearing account or a TOD facility from the bank.
The members with a funds pay-in obligation are required to have clear funds in their primary clearing account on or before 10.30 a.m. on the settlement day. The payout of funds is credited to the primary clearing account of the members on or after 1.30 p.m. on the settlement day.
Members are required to ensure that adequate funds are available in the clearing account towards all obligations, on the scheduled date and time.
Trading and/or clearing facility of members failing to fulfill their funds obligations, in all markets including the valuation debit raised on account of securities shortages to Clearing Corporation, shall be withdrawn. Further, securities pay-out, due to such clearing member shall also be withheld.
The above provisions apply if net cumulative fund shortage for a member is:
- Equal to or greater than Rs. Five (5) lakhs at the end of pay-in.
- Equal to or greater than Rs. Two (2) lakhs for six (6) or more occasions in the last three (3) months on any given day
In case, the member is disabled on account of (2) above, on making good the shortage amount, the member shall be permitted to trade subject to its providing a deposit equivalent to its cumulative funds shortage as the 'funds shortage collateral'. Such deposit shall be kept with the Clearing Corporation for a period of ten settlements and shall be released only if no further funds shortages are reported for the member in next ten consecutive settlements. Members may further note that there shall not be any margin benefit or any interest payment on the amount so deposited as 'funds shortage collateral'. The amount may be provided by way of cash, fixed deposit receipts, or bank guarantee, equivalent to the cumulative funds shortage.
Apart from the above, the member will be required to pay a penal charge on the amount outstanding at the end of the day, till the amount is recovered.
Updated on: 03/03/2023
