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Credit for Sale (CFS)

Modified on: Fri, 5 Aug, 2022 at 2:02 PM

When you sell your Depository holding or close your open positions, the credit you receive is called Credit for Sale. If you have sold Equity shares from your Demat account (Delivery Sale), you cannot take positions for such sale credit on the same day. As per statutory guidelines you are required to pay 20% minimum upfront margins while taking equity positions and if the required margins are not available there is a penalty levied by the exchange. Now since we offer Temporary funding till T+2+5 for certain stocks where you are only required to pay 50% margin, we are not able to provide Credit for Sale (CFS) facility on T day. Lets understand this through an example to see what would happen if CFS facility is offered and you do BTST (buy today and sell tomorrow transaction) on a stock where you pay only 50% margin

 

 Day

Transaction

Minimum statutory upfront Margin @20%

Margin Paid by you

Trade day

Purchase Reliance Industries for Rs. 1 Lakh

Rs. 20,000

Rs. 50,000

Trade Day +1 

Sold Reliance Industries for Rs. 1 Lakh

Rs. 20,000

NIL

Trade Day +1

Bought Tata Steel for Rs. 1 Lakh with sale proceeds from sale of Reliance

Rs. 20,000

NIL

Total 

 

Rs. 60,000 (A)

Rs. 50,000 (B)

Margin Shortfall (B-A)

 

 

(Rs. 10,000)

 

As you can see from the above example had we offered CFS and you did BTST for a 50% margin stock, and used the BTST CFS to buy another stock on T+1 day, then your account would reflect a margin shortfall of Rs. 10,000 and exchange would levy a penalty for the same. 


Hence in order to protect your interest we provide CFS only on Trade day +1  (or Next trade day)

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