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Why is there a mismatch between the PIS account balance and what is updated on Kite?

As a risk management measure, we update the margins after reducing 0.3% ( Trade charges ) + applicable PIS reporting charges, from the total PIS account balance that is shared by the banks. This is in order to avoid any delay in settlement from the bank due to insufficient funds in the client's PIS account.

For example: if the balance in your PIS account is Rs.10,00,000(Rupees Ten Lacs) the Kite balance will be updated as Rs.9,97,000 approximately. Let's say you buy shares worth Rs.9,96,000 with this with us, and the charges are Rs 2,900 we send the contract note for Rs.9,98,900 and this gets settled by the bank as there is sufficient balance.

What happens if I don't use up all this amount?

You invested only Rs.1,00,000, let's say the charges come up to Rs 310. We send a contract note for 1,00,310 to the bank and the new PIS balance will be Rs. 10,00,000-Rs.1,00,310 i.e. Rs.8,99,690, the next day the balance updated on Kite will be 99.7% of this PIS balance.