Settlement of Shares – Everything You Need to Know

Every investor wants to know when the shares they have bought will be credited into their Demat account. The market follows a T + 1 settlement system. In this article, we will look into what a T + 1 settlement system is and what might be the reasons for your transaction being delayed.

Types of Settlements

  1. Spot Settlement: This method aligns with the rolling settlement principle of T+2, ensuring immediate settlement of trades.
  2. Forward Settlement: In contrast, forward settlement involves agreeing to settle the trade on a future date, which could be T+5 or T+7, allowing for a more flexible approach.

Rolling Settlement: The Timely Transition of Ownership

Rolling settlement is the cornerstone of the stock market’s dynamic nature. In this system, trades are settled within T+2 days, excluding weekends and holidays. For example, a trade executed on Wednesday is settled by Friday. The settlement date also holds significance for dividend-seeking investors, as ownership before the record date is crucial for dividend entitlement.

Indian Stock Market Trading and Settlement Process

Rolling Settlement Rules in BSE:

  • Securities in the equity segment settle in T+2 days.
  • Government and fixed-income securities for retail investors also follow a T+2 settlement.
  • Same-day pay-in and pay-out of funds and securities is required.
  • Delivery and payment by the client must occur within one working day after BSE’s fund and securities pay-out.

Settlement Cycle on the NSE:

  1. Trading in rolling settlement (T)
  2. Clearing, involving custodial confirmation and delivery generation (T+1)
  3. Settlement through securities and funds pay-in and pay-out (T+2)
  4. Post-settlement auction (T+2)
  5. Auction settlement (T+3)
  6. Reporting for incorrect deliveries (T+4)
  7. Pay-in-pay-out of rectified incorrect deliveries (T+6)
  8. Re-reporting of incorrect deliveries (T+8)
  9. Closure of re-corrected deliveries (T+9)

Pay-In and Pay-Out: A Crucial Transaction Phase

Pay-in marks the day when the buyer transfers funds to the stock exchange while the seller dispatches the securities. Conversely, pay-out is the day when the stock exchange disburs funds to the seller and delivers the purchased shares to the buyer.

Understanding Bad Delivery

A bad delivery scenario arises when share transfer faces obstacles due to non-compliance with exchange norms. Such situations can lead to disruptions in the settlement process.

What is T + 1 Settlement?

T+1 settlement refers to a one-day settlement cycle for securities transactions. It is the standard settlement cycle for most securities. Under T+1, when a trade is made, the buyer must pay for the securities, and the seller must deliver the securities to the buyer’s depository (e.g. a Demat account). This means that the trade date and the settlement date are one business day apart.

For example, if a trade is made on a Monday, the settlement date would be Tuesday. In this case, the payment must be made by the settlement date, which is typically one business day after the trade date. The payment can be made before the settlement date, but it must be received by the settlement date.

This system helps to ensure that the buyer has the funds and the seller has the securities to complete the transaction, and it also helps to reduce the risk of failed settlements. In the event that a trade cannot be settled on the settlement date, the DTC and the NSCC will work to resolve the issue and ensure that the trade is settled as soon as possible.

The T+1 settlement system is designed to be efficient and secure. It is also designed to be flexible and adaptable to the changing needs of the securities market. Overall, T+1 settlement is a critical part of the securities trading process that helps to ensure the smooth and efficient settlement of securities transactions.

What Might Be The Reason For Shares Not Being Transferred Even After T + 1 Days?

1. Due Payments Have Not Been Done To The Broker

While trading on a Demat account there are certain modest fees that must be paid to the depository participants. Depository participants usually do not block the transfer of securities for unpaid dues but unpaid dues might gather over a period of time resulting in a huge due. These fees can include market losses, yearly maintenance charges etc. It is important to check past dues and contact the depository participant to know if shares have been blocked for this reason. 

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2. Insufficient Amount Of Shares Bought 

In certain cases, an investor might be able to get a certain amount of shares, but it might be the case that within the time period specified for the transaction, the shares might not be accessible in the market for sale. This might happen when the market is experiencing liquidity

Issues. Usually, this occurs with large-cap stocks or firms that trade in huge volumes. In this case, you might get the stock within 5-6 days or you will be issued a refund of your money.


Usually, shares get credited into your account in T + 1 day. There might be rare instances of your shares getting delayed due to outstanding dues and liquidity problems in the market. If the shares have not been credited to the buyer’s depository by the settlement date (T+1), the buyer should contact their broker or depository participant to inquire about the status of the settlement.


Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.