T+1 settlement will start from today(25 February 2022) on select stocks and will continue till the last stock to move under this settlement in a phased manner that will be stretched for subsequent months.
What is a settlement?
Settlement is an official transfer of shares to the buyer’s account and cash to the seller’s account. Indian stock exchanges presently follow the T+2 settlement cycle for the transfer of shares and money. Settlement happens after 2 days from the execution date, i.e., if you buy shares on Monday, it will be credited after 2 working days, here it would be on Wednesday.
Prior to the T+2 settlement, India was following the T+3 settlement cycle, i.e., 3 days to get the credit of shares into your account after the transaction, Now SEBI is planning to reduce the time to one day. T+1 settlement will allow the buyer to get the credit of the shares and money within 24 working hours.
How will this be useful for me as a retailer?
Waiting time for shares and cash will be reduced from 2 days to 1 day, which would allow more liquidity, availability of credits within a day as the blocked funds will be released sooner compared to earlier.
This settlement cycle will be applied across all the types of transactions in the stocks and would be done in a phased manner.
Starting from the last Friday of February 2022, 100 stocks that are at the bottom of market evaluation would be placed under the new settlement cycle. Hereafter every Friday 500 more stocks will be moved to the new settlement cycle for subsequent months until every stock is under the new cycle.