- Insufficient Funds for Trades: If you place a trade without enough funds and the order is executed at a higher price due to market changes, your account may go negative.
- Blocked Margin Adjustments: Changes in your blocked margin can lead to a negative balance if not managed properly.
- Uncovered DP Charges: Depository Participant (DP) charges are applied when shares are debited from your Demat account. If your account balance is insufficient to cover these charges, it results in a negative balance.
Consequences of a Negative Balance:
- Delayed Payment Charges (DPC): A daily charge of 0.045% plus GST applies for each day your balance remains negative.
- Pledged Facility Restrictions: Your pledged facility will be blocked if the negative balance persists for more than 5 consecutive trading days.
- Liquidation of Pledged Shares: Pledged shares may be liquidated after 7 consecutive trading days with a negative balance to recover the amount.
To avoid penalties, ensure you add funds promptly when your balance goes negative.