T+1 Settlement Explained: When Do Your Shares and Money Actually Reach Your Accounts?

Key Takeaways

1. Under T+1 settlement, trades in the Indian share market settle one trading day after the trade date.
2. When you buy shares, they are generally credited to your demat account on the next trading day after the trade.
3. When you sell shares, the sale amount is generally credited to your trading account on T+1, and the transfer to your bank depends on your withdrawal request and broker process.
4. Weekends and exchange holidays are not counted as trading days, so a Friday trade usually settles on Monday.
5. Keeping your demat account details, bank details, and sell authorisation updated can help with account related settlement and withdrawal process. 

You place a buy order, it gets executed, and the shares may show up in your holdings list. But are they really in your demat account yet?  A complete trade and a settled trade are not the same thing.

Selling raises a similar doubt, as the money does not land in your bank right away. Both gaps come from the settlement cycle followed in the share market.

Through this blog, you can understand what T+1 settlement means, when your shares and money actually move, and what can cause a delay.

What Is T+1 Settlement?

Settlement is the final step of a delivery trade, where the buyer receives the shares, and the seller receives the money.

In T+1, "T" stands for the trade day, the day your order is executed. "+1" means settlement is completed one trading day after that.

The transition to the T+1 settlement cycle in India took place in stages, and was completed for all listed securities in January 2023. Before this, the Indian share market followed a T+2 cycle, where settlement took two trading days.

When Do Shares Reach Your Demat Account After Buying?

Here is how a typical buy trade moves:

• Trade day (T): Your buy order is executed on the exchange. The amount for the purchase is debited or otherwise accounted for in your trading account as per the applicable process.
• T+1: The clearing corporation completes settlement, and the shares are credited to your demat account, generally by the end of the day.

So if you buy shares on a Tuesday, they will generally reach your demat account on Wednesday.

Until settlement is completed, the shares may appear as "T1" or "unsettled" holdings on your broker's platform. The securities are credited to your demat account after the applicable settlement process is completed.

When Does Money Reach Your Account After Selling?

Selling follows a slightly different path:

• Trade day (T): Your sell order is executed. The securities are debited from your demat account after the required authorisation, such as through TPIN or DDPI, as applicable.
• T+1: The sale amount, after applicable charges, is credited to your trading account.
• After T+1: The money reaches your bank account when you place a withdrawal request, and your broker processes it.

Here's a simple way to compare the two:

How Weekends and Holidays Affect Settlement

T+1 counts only trading days. Saturdays, Sundays and exchange holidays are not included.

For example, if you buy shares on a Friday, they will generally be credited to your demat account on Monday.

If Monday is an exchange holiday, settlement moves to Tuesday.

Check the exchange holiday calendar when planning a trade or withdrawal around a specific date.

Common Doubts About T+1 Settlement

Can I sell shares before they reach my demat account?

In some cases, you can sell shares bought on the previous day before they are credited to your demat account. This is commonly known as BTST (Buy Today, Sell Tomorrow), subject to the applicable broker and exchange rules. However, if the original seller fails to deliver the shares, there can be a short delivery, and auction-related penalties may apply.

Why do my shares show in holdings but not in my demat statement?

Your broker's platform shows the trade or unsettled holding once it is executed. The securities appear in the demat account after the applicable settlement process is completed.

Is the sale amount available for new trades on the same day?

The amount available for fresh trades can depend  on the broker's applicable rules and margin framework. Withdrawal to your bank account is subject to settlement and the broker's withdrawal process.

Is there a faster option than T+1?

SEBI has also introduced an optional same-day (T+0) settlement for a limited set of stocks. T+1 continues to be the standard cycle for most trades in the share market.

How mastertrust Helps You Track Settlement

mastertrust provides a trading & demat account on mastertrust.co.in where you can view your orders, holdings, and available account information.

You can authorise sell transactions digitally and place withdrawal requests once the sale amount is settled.

If you are new to holding shares electronically, you can read about the benefits of a demat account and how to trade online using a trading and demat account.

Final Thoughts

T+1 settlement means that eligible trades in the Indian share market are settled one trading day after the trade date. Once you know that shares reach your demat account on T+1, and sale proceeds are generally credited to your trading account on T+1, you can better understand the movement of securities and money.

Keep weekends, holidays and withdrawal timelines in mind while planning your trades.

Frequently Asked Questions (FAQ)

1. What does T+1 mean in the share market?

T+1 means a trade is settled one trading day after the trade date. Shares are credited to the buyer’s demat account and sale proceeds are credited to the seller’s trading account, subject to the applicable settlement process. 

2. When will bought shares appear in my demat account?

Shares are generally credited to your demat account on the next trading day after your buy order is executed.

3. When will I receive money after selling shares?

The sale amount is generally credited to your trading account on T+1. It reaches your bank account after you place a withdrawal request and it is processed.

4. Does T+1 include Saturdays and Sundays?

No. Only trading days are counted, so weekends and exchange holidays are excluded.

5. Why is my sale amount not in my bank account yet?

Settlement credits your trading account first. A withdrawal request moves it to your bank.

6. Can I check my settled holdings with mastertrust?

Yes. You can view your holdings and access your demat account related information and statements through the mastertrust platform.