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

The credit from selling T1 holdings (Buy Today Sell Tomorrow [BTST] trades) cannot be used on the same day as per regulations (PDF). The circular states that credit from the sale of holdings can only be utilised once the Early Pay-In (EPI) process is completed. To learn more about BTST, see How to do BTST trades at Zerodha?

When T1 holdings are sold, the EPI process cannot be carried out until the shares are settled in the client’s demat account. Hence, proceeds from selling T1 holdings can only be used from the next trading day when the shares are settled.

Example Scenario

  1. On Monday (Trade day), Mr A purchased Reliance shares worth ₹10,000.
  2. On Tuesday (T1), Mr A sold these shares for the same amount.
  3. Earlier, 80% of the ₹10,000 (i.e., ₹8,000) would have been released for him to immediately place other trades or buy back the same stock after selling the T1 holdings.
  4. However, due to the new 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.