Running Account Authorization & How Does it Work on Groww?
Running Account Authorization is a process by which investors can authorize their broker to retain funds in their trading account. Previously the settlement date was voluntary for the user but now post the SEBI circular, the settlement cycle has been standardised for the industry.
How does Running Account Settlement work on Groww?
As per SEBI circular SEBI/HO/MIRSD/DOP/P/CIR/2022/101 dated July 27, 2022, any amount in your Groww balance account will be transferred to your primary bank account within 30 or 90 days.
Let's understand this with the help of two scenarios.
Scenario 1: Quarterly/monthly settlement cycle
As per SEBI guidelines, if you are a regular trader/investor, your account will be settled and the remaining amount in the Groww balance will be refunded to your primary bank account on the first Friday of every quarter or month depending on which settlement cycle was chosen by you.
In case Friday is a trading holiday, the settlements will be done on the previous trading day.
Scenario 2: If there is no transaction in the last 30 days
If you have not used your Groww Balance for any trades/investment transactions for 30 days straight, money remaining in your Groww Balance account will be sent to your primary bank account on the 30th day of no transaction.
Note - In order to trade back, you'll have to add the funds back to Groww Balance.
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Running Account Authorization – FAQs
- Is RAA Safe?
Yes, it is completely safe. RAA is nothing but an authorisation given by you to your broker on retaining funds in your account. It is returned to your bank account depending on certain caveats discussed above. Moreover, with such strict norms of SEBI and Exchanges brokers, there is no need to worry.
2. What amount Groww can retain during the Settlement?
If you have an outstanding trade position on the first Friday of the given settlement cycle, a broker is authorized to retain the following:
- 100% of the pay-in obligation due at EOD on the settlement date. Here, pay-in obligation is the gross amount of funds due from you; applicable across equity, commodity, and currency.
- 50% of EOD margin which would be required as cash margin. This is exclusive of the MTM loss margin or option premium payable, which is referred to as Consolidated Crystallized Obligation in SEBI's official circular.
- Total 225% of EOD margin, combining 50% as cash margin (as above) and 175% as margin pledge (an appropriate haircut applicable for the margin fulfilled by the way of pledge). When margin pledge is insufficient, the same may be retained from available cash.
3. What does it Change for me?
If the investor has opted for running account authorization, the funds will be settled (sent to your primary bank account) once in 30 or 90 days as discussed above.
4. Is it mandatory to complete RAA?
Yes it is mandatory. While opening a new demat account you will be asked if you want the funds to be settled in your account in 30 or 90 days. However, RAA on the whole is not an option and is mandatory due to SEBI rules.
5. Do I have to maintain a minimum balance if I opt for RAA?
No, there is absolutely no need of maintaining minimum balance as RAA.
6. When should a client account be settled?
As per the exchange guidelines, the settlement of funds is done depending on the authorisation given be you. The money lying in your Groww Balance account will be automatically sent to your primary bank account depending on a few guidelines.