What is a retention statement?

As per SEBI’s circular (WEB), funds in the trading account must be transferred back to the client's bank account once a quarter. To learn more, see What is a quarterly settlement or running account settlement?

However, brokers can retain up to 225% of End Of the Day (EOD) margins if a client has an outstanding position on the quarterly settlement date. The reason for retaining funds is explained in the retention statement. The regulators specify the format of the retention statement. The format can be viewed under Annexure 1 of the NSE circular (PDF).

Example scenario

1. The Zerodha account balance is ₹1,00,000.
2. Three lots of Nifty were purchased at ₹27,000 per lot.
3. The margin blocked for this trade would be ₹81,000 (₹27,000 * 3 lots).
4. The available margin would be ₹19,000.
5. Zerodha can retain up to ₹1,82,250 (2.25 *₹81,000), mark this account as retained, and email the retention statement.
6. If the funds in the Zerodha account were greater than ₹1,82,250, the excess funds would have to be transferred back to the client’s primary bank account.