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Funds Settlement

NSE Clearing has empanelled 13 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 and Union Bank of India.

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.

Download Format of Letter to be submitted by member to bank for operation of Primary and Secondary Clearing Account (.doc)

Every Clearing Member is required to maintain and operate a primary clearing account with any one of the empanelled clearing banks at the designated clearing bank branches. The primary clearing account is to be used exclusively for clearing operations i.e., for settling funds and other obligations to the Clearing Corporation including payments of margins and penal charges. A Clearing member having funds obligation to pay is required to ensure availability of sufficient clear balance in the clearing accounts on or before the stipulated funds pay-in day and the stipulated time.

Further, every clearing member can maintain and operate additional clearing accounts exclusively for the purpose of enhancement of collaterals. All the credits and debits other than collateral enhancement specified by the member would be routed through the primary clearing account.

Maintenance of a primary clearing account and one additional clearing account would not be chargeable. However, starting from second additional clearing account onwards, a charge of Rs.5000 plus service tax would be levied for every additional clearing account activated for the clearing member. Clearing members are required to send a Demand Draft, favoring National Securities Clearing Corporation Ltd for the total amount of applicable charges plus service tax, along with the request for activation of additional clearing account.

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 (Ref. Circular No.: NSE Clearing/CM/C&S/425) from one designated clearing bank to another designated clearing bank, the following procedure is required to be followed:

  • The clearing member while requesting the Clearing Corporation for a change in the primary clearing bank account would either
    1. Furnish the no objection certificate (NOC) received by the member from the existing primary clearing bank for shifting of account, or
    2. In case no response was received by the clearing member from the existing primary clearing bank in respect of the NOC request even after a minimum waiting period of a fortnight, a declaration to the above effect along with an acknowledged copy of the NOC request made by the member to the existing primary clearing bank.
  • The Clearing Corporation would thereon issue a letter of introduction to the other designated clearing bank.
  • On opening the account with the other designated clearing bank, the clearing member is required to submit to the Clearing Corporation the account particulars issued by the bank and also the acknowledged copy of the letter issued by the clearing member to the clearing bank (as per specified format)

The Clearing Corporation would communicate the date from which the new primary clearing account will 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.

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: 30/09/2019
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