What Is Running Account Settlement? SEBI Rules

Running account settlement is the rule that stops your money sitting with your broker indefinitely. If you have authorised a running account, the broker must return your credit balance to your bank account on a fixed cycle, quarterly or monthly at your choice, on dates the exchanges publish in advance. If you have not authorised one, funds must come back within twenty-four hours of the payout. Both rules sit in the Master Circular for Stock Brokers dated 17 June 2025.

Running account settlement is the exception, not the default

Para 23.1.1 sets the baseline before any authorisation exists: unless the client specifically agrees otherwise, settlement of funds shall be done within twenty-four hours of the payout. A running account is the exception a client opts into, not the standing arrangement.

That framing matters, because the quarterly cycle is often described as the rule when it is actually the carve-out.

What a valid running account authorisation looks like

Para 23.1.1 lists the conditions the authorisation must satisfy:

• Signed by the client only. Not by any authorised person on the client's behalf, and not by a holder of the power of attorney.
• Dated.
• Revocable at any time, with an express clause saying so.
• Restated in every periodical statement. The broker, while sending periodical statements of accounts, must mention in them that the running account authorisation continues until the client revokes it.

The authorisation is therefore open-ended but never silent. A client who forgets they granted one is reminded on every statement.

The settlement cycle, and where the dates come from

The client picks quarterly or monthly. The dates are not the broker's to choose.

Para 15.10.1.2 requires the stock exchanges to jointly issue the annual calendar for running account settlement, quarterly and monthly, at the beginning of the financial year. The trading member settles on those stipulated dates after considering the end of day obligation of funds across all exchanges, which is why the settlement is a net figure rather than a per-exchange one.

Para 15.10.1.3 adds a ring-fence that is easy to miss and is the most investor-relevant line in the section: funds received from clients whose running account has been settled must remain in the up streaming client nodal bank account, and no such funds shall be used for settlement of the running account of other clients. The exchanges must evolve a monitoring mechanism for it. One client's money cannot fund another client's payout.

How the money moves, and when it counts as paid

Para 15.10.1.4 sets electronic transfer as the mode: NEFT, RTGS or similar. Bank details must be obtained from new clients and updated for existing ones. A broker may issue a physical payment instrument only where electronic payment instructions have failed or been rejected by the bank.

Para 15.10.1.6 then removes the obvious gaming opportunity. Where a cheque or demand draft is issued because electronic payment failed, the settlement date is the date the instrument is realised into the client's bank account, not the date it was issued.

Para 15.10.1.7 requires an intimation on settlement, by SMS to the client's mobile number and by email, carrying the transaction number and date for an electronic transfer or the instrument number and date for a physical one. The retention statement and the statement of running accounts follow within five working days, and para 23.1.1(g) gives the client thirty working days from the date of the statement to raise a dispute on it.

When periodic settlement is not required

Para 23.1.1(h) names two exclusions. Periodic settlement of the running account may not be necessary for clients availing the margin trading facility per the relevant SEBI circular, and for funds received from clients towards collateral or margin in the form of a bank guarantee or fixed deposit receipt.

Separately, para 23.1.1(i) covers ad hoc requests: the broker must transfer funds or securities lying to the client's credit within one working day of the request if they are with the broker, and within three working days if they are with the clearing corporation.

Where this sits relative to the filing record

Running account settlement is a client-money rule, not a disclosure. It governs the cash side of your relationship with a broker, and none of it is reported in any public filing about a company.

• Upstreaming of client funds is the parallel rule for where your idle cash must be parked in the meantime.
• A trading member pool account is the securities side of the same broker plumbing.
• SCORES 2.0 and the SEBI ODR portal are the two routes if a settlement does not arrive.
• The shareholding pattern is where company ownership is actually disclosed, quarter by quarter.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.