Why is the credit from selling T1 holdings unavailable for use on the same day?

Q: Why can’t I use the credit from selling T1 holdings on the same day?

A: According to regulations (PDF), the credit from selling T1 holdings (Buy Today Sell Tomorrow [BTST] trades) cannot be utilized on the same day. As per the circular, the credit can only be used once the Early Pay-In (EPI) process is completed. The EPI process can only be initiated once the shares are settled in the client’s demat account. Therefore, the proceeds from selling T1 holdings can only be utilized from the next trading day when the shares are fully settled.

Example Scenario:

On Monday (Trade day), if you purchased Reliance shares worth ₹10,000, and on Tuesday (T1) you sold these shares for the same amount, under the previous system, 80% of the ₹10,000 (i.e., ₹8,000) would have been released for you to immediately place other trades or buy back the same stock after selling the T1 holdings. However, due to the recent changes, funds will not be released on Tuesday. Instead, 100% of the funds, i.e., ₹10,000, will be released on Wednesday.

Did you know? The proceeds from selling T1 holdings will not be considered as margins on the same day for open positions.