Settlement Holiday

Settlement holiday: What does it mean ?

The Reserve Bank of India has rescheduled the (Eid-e-Milad) holiday to Wednesday, September 18, moving it from the originally planned date of Monday, September 16, after a similar announcement from the Maharashtra government. During a settlement holiday, the settlements of funds and stocks would not take place even though the exchanges are open for trading purposes. This happens when banks in Maharashtra are closed, but trading on exchanges is open, Zerodha co-founder (Nithin Kamath) explained in his social media posts on Monday.

He said “Most brokers don’t allow shares bought on Friday to be sold on Monday because of this (settlement holiday). We, Zerodha, are among the few brokers that allow you to sell stocks bought on Friday,”.

During a settlement holiday, equity intraday profit credits and F&O (Futures and Options) credits are not included in the trading balance. They cannot be withdrawn until after the holiday. If a user makes intraday profits on February 18 (Rs 1,000), these profits will be reflected in their account balance after the settlement holiday, assuming the holiday is on February 19. Similarly, if a user had credits of Rs 10,000 arising out of February 18 in the F & O segment then they will receive the Credit of Rs 10,000 in the F & O segment on the business day after February 19.