I know quarterly settlement payments have been discussed before. Allow me to articulate and highlight the pain points faced by an investor in this process so you can fill the gaps and improvise:
As the SMS says, settlement may happen anytime during the next 10 days. Will it happen during market hours or after market hours. When in the next 10 days, today, tomorrow, day after. There is a lot of uncertainty in these 10 days.
I may already have a GTT buy order setup and if during the quarterly settlement incidentally the GTT triggers, due to lack of margin, the order won’t be placed and it’s an opportunity loss for me.
The settlement would be done by NEFT transfer and you must be knowing that there is a lag between the payment made by Zerodha and the fund received in the recipient’s bank account. It’s not real-time. Consider I don’t have more funds in my bank account to transfer it to the Zerodha trading account.
To avoid quarterly settlement, I can’t invest in an overnight fund. Although there is no exit load in an overnight fund, there is a T+1 settlement time, a lag again to access my fund.
If I invest that money in Liquidbees, unnecessary DP charges I have to bear while selling to realize margin.
If I invest in Liquidbees and pledge it, I can’t use the margin for delivery orders (remember my GTTs).
So my main question is - can there be a solution to avoid this unnecessary cycle of quarterly settlement initiation by Zerodha, and fund received by us and then we transfer it back to Zerodha. Every quarter we do this unproductive task.
Wait. Please do not jump to a straight ‘No’. Because it’s the easiest thing to say. I am well aware of SEBI guidelines enforcing it. I am only telling that please meditate on my words and see if there lies a viable solution and help us find the liberation from quarterly settlement.
Let me tell you a story.
Jio is a regulated business too where TRAI is the regulatory authority. Now, as per TRAI rules and guidelines, any mobile operator has to send monthly hardcopy bills to postpaid subscribers’ addresses by post. So if you are a postpaid customer, you would receive a paper bill by default. Now this involves printing bills and dispatching them every month which incurs printing and postage charges for the telecom company.
Vodafone and Airtel run ‘go green’ marketing campaigns asking users to opt for e-bill. But the conversion is very low. What Jio did - when you take a Jio postpaid connection, you sign up for Jio Prime program (even while taking a prepaid connection) by paying Rs 99 and in the terms and conditions of the Jio Prime program, it mentions that ‘I agree I do not want a paper bill by default’. So while TRAI rules enforce telecom operators to send paper bills compulsorily, the user taking Jio postpaid connection, by signing up for Jio Prime program is overriding the TRAI rule by giving consent to Jio to send an e-bill by default. If the user wants a paper bill, he can explicitly mention this and would get a paper bill. Even later any time he can call up customer care and ask for a paper bill.
A small step saves crores of monthly expenses for Jio.
I shared this story just so you could think again if there lies a viable solution to get liberation from these quarterly settlement payouts. I am sure, where there is a will, there is a way.