It’s a Master Policy of the Company for the acceptance of Prefunded Instruments. This policy is Subject to the rules and regulations of the Exchange from time to time.
Acceptance of Prefunded Instrument for trades on Exchanges.
Head office, all the branches of the Company and all thefranchisees of the company wherever trading terminals / IBTterminals are there.
Acceptance of Prefunded Instruments like Demand Draft/Payorder/Bank Guarantees from a client against Payin Obligation/ Margin.
The Prefunded Instruments must be accepted only in following special circumstances;
1) If there are Bank Holidays on the following day.
2) If the client does not have an account in the bank in which the company has accounts.
3) If the client wants to create a position immediately and has no other way of
4) If the Bank account of the client is in a cooperative bank, which may take some time
for the cheque to be cleared.
5) If the company Bank accounts clearing branch is not available in the city/village
where the client has his bank account.
6) All the procedures prescribed in Cir/MIRSD/03/2011 dated 9/6/2011 Dt 09/06/2011
which is annexed with.
The Objective of this policy is to minimize the frequency of acceptance of Prefunded
Instrument, specially Demand Draft where there is a difficultyin tracking the correct
source of Issuance.
The Prefunded Instruments must be accepted only in cases mentioned above and not
otherwise. Approval for acceptance must be taken by either of the executive Directors
or the Managing Director and only then credit should be given..
June 9, 2011
All Recognized Stock Exchanges
Sub:Pre- funded instruments / Electronic fund transfers
1. SEBI vide Circular No. SEBI / MRD / SE / Cir-33 / 2003 / 27 / 08 dated
August 27, 2003, while specifying the mode of receipt and payment of
funds, has permitted the stock brokers to accept Demand Drafts from their
2. While receiving funds from the clients through pre-funded instruments, such
as, Pay Order, Demand Draft, Banker’s cheque, etc., it is observed that the
stock brokers are unable to maintain an audit trail of the funds so received,
as the details of the name of the client and bank account-number are not
mentioned on such instruments. This may result in flow of third party funds /
unidentified money, which is not in accordance with the provisions of the
aforesaid circular and also affects the integrity of the securities market.
3. Therefore, with a view to address the aforesaid concerns, it has been
decided in consultation with the major stock exchanges and associations of
stock brokers, as under:
a. If the aggregate value of pre-funded instruments is ` 50,000/- or
more, per day per client, the stock brokers may accept the
instruments only if the same are accompanied by the name of the
bank account holder and number of the bank account debited for the
purpose, duly certified by the issuing bank. The mode of certification
may include the following:
i. Certificate from the issuing bank on its letterhead or on a plain
paper with the seal of the issuing bank.
ii. Certified copy of the requisition slip (portion which is retained
by the bank) to issue the instrument.
iii. Certified copy of the passbook/bank statement for the account
debited to issue the instrument.
iv. Authentication of the bank account-number debited and name
of the account holder by the issuing bank on the reverse of the
b. Maintain an audit trail of the funds received through electronic fund
transfers to ensure that the funds are received from their clients only.
a. issue necessary instructions to bring the provisions of this Circular to
the notice of their constituents and also disseminate the same on
b. make amendments to the relevant bye-laws, rules and regulations for
the implementation of the above, as deemed necessary;
c. communicate to SEBI, the status of the implementation of the
provisions of this Circular by June 30, 2011; and
d. develop the monitoring mechanism through internal audit and
5. This Circular is issued in exercise of powers conferred under Section 11 (1)
of the Securities and Exchange Board of India Act, 1992 to protect the
interests of investors in securities and to promote the development of, and
to regulate the securities market and shall come into effect from the date of
6. This circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework” and “Circulars”.
V S Sundaresan
Chief General Manager