What does T+2 settlement mean?
T here refers to the day of initiating the buy/sell transaction. Settlement refers to the period when stocks reach the buyer’s account & cash reaches the seller’s bank account.
Until recently, the Indian stock exchanges were following the T+2 settlement rules, India was the first major economy to adapt to T+1 for stocks. AMFI also followed NSE’s framework for shorter settlement times – Instead of T+3 days of settlement, starting today, Equity mutual funds are now settled for T+2 days.
Key Timelines to know
From 1st February 2023, customers withdrawing money from equity mutual funds in India will be credited to their bank account within 2 days instead of the previous 3-day timeline.
|Scheme||Cut-off time||Applicable NAV||Payout Day|
|Equity||2.45 PM||Same Day||T+2 Business Day|
|Schemes||Cut-off time||Switch-Out NAV||Switch-In NAV|
|Equity to Equity||2.45 PM||Same day||T+2 Business Day|
|Equity to Debt||2.45 PM||Same day||T+2 Business Day|
|Equity to Liquid||2.45 PM||Same Day||Day Prior to T+2 Business Day|
Note: The orders received in equity mutual funds till the cut-off time on Jan 31, 2023, will be credited on T+3 days.
This is evident that the introduction of the shorter settlement system looks into the interest of the investors and reduces the risks involved with capital markets. Furthermore, it encourages the stakeholders, including exchanges, brokers, clearing corporations, and exchanges, to upgrade their infrastructure and technology. Take your first step into investments with Angel One.