Running Account Authorization – How Does it Work on Groww?
Greetings investors! In this blog, we will explain what running account authorization is and how it works on Groww. Running Account Authorization is a process by which investors can authorize their broker to retain funds in their trading account.
In Groww's context, RAA allows you to authorise us on how much of your money should we keep in your Groww Balance account and how much should be sent back to your primary bank account.
Let's understand this in detail.
What is Running Account Authorization?
Running account authorisation allows your broker to run your account as a running account, which means that any money in your account, (Groww Balance in this case), can be retained for a few days before it has to be sent to your bank account.
Once authorised, the 'running' account can retain your funds for upto 30 or 90 days.
Without a running account authorisation, the broker would have to settle your account and send the money back to your bank account after each transaction. As a result, you will have to add funds repeatedly to your Groww Balance before making any investment.
How does it work on Groww?
As per SEBI circular, MIRSD/ SE /Cir-19/2009 dated December 3, 2009, Groww is required to return any money remaining in your Groww balance account within 30 or 90 days. Let's understand this with the help of two scenarios.
Scenario 1: If there is no transaction in 30 days
If you have not used your Groww Balance for any trades/investment transaction for 30 days straight, money remaining in your Groww Balance account will be sent to your primary bank account on the 30th of no transaction.
Scenario 2: If you have traded/invested in 30 days
If you have made some transactions over 30 days, money remaining in your Groww balance will be returned to your primary bank account in 30 or 90 days, depending on the authorisation given by you while opening your demat account on Groww.
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.
- 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.
- 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.
- 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.
- 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.
