5.9 Pay-in and pay out of funds


The settlement of funds' obligations is done through the clearing banks attached to clearing corporations attached to exchanges. NSCCL is the clearing corporation of NSE while for BSE it is BOI Share Holding (a subsidiary of Bank of India and BSE). However, for ease of explanation let’s take the case of NSE and discuss the process.

Clearing members are required to open a clearing account with any one bank for the purpose of settlement of their transactions. They authorise their clearing bank to access their clearing account for debiting, crediting, reporting of balances and any other information in accordance with the advice received from the NSCCL. Clearing accounts are used exclusively for clearing and settlement of transactions, i.e. for settling funds and other obligations to / from the NSCCL, including payments of margins and penal charges. Clearing banks debit / credit the clearing accounts of clearing members as per instructions received from the NSCCL electronically.

Members are informed of their funds’ obligations for various settlements through the daily clearing data download. The summary statement provided to members summarizes the debit / credit information for a quick reference. Members can refer to these statements and provide for funds accordingly. Based on estimated pay-in and pay-out of funds, on the day preceding the pay-out day, the NSCCL advises the banks having pay-in in excess of pay-out to issue pay orders to the banks having pay-in less than the pay-out. The deficit banks accordingly get the funds to facilitate timely pay-out.

Funds Shortage:

Members have to ensure that adequate funds are available in the clearing account towards all obligations, on the scheduled date and time. In all cases of funds shortages, the NSCCL may initiate various actions, including withdrawing the trading facility of the member, withholding the securities pay-out due to the member, reduction in permissible gross exposure limits, requiring the member to make advance pay-ins etc.

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