The Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) had released a circular dated August 27, 2003, regarding the mode of payment and delivery.
In furtherance of the same, SEBI released its circular1 dated July 12, 2018, notifying all the recognized stock exchanges with respect to the discontinuation of acceptance of cash by Stock Brokers. SEBI has specified that all the payments shall be received / made by the Stock Brokers from / to the clients strictly by account payee crossed cheques/ demand drafts or by way of direct credit into the bank account through electronic fund transfer, or any other mode permitted by the Reserve Bank of India.
The stock brokers shall accept cheques drawn only by the clients and also issue cheques in favour of the clients only, for their transactions. However, the Stock Brokers shall not accept cash from their clients either directly or by way of cash deposit to the bank account of the Stock Broker. This circular essentially modifies SEBI’s above-mentioned circular regarding the mode of payment and delivery although SEBI has also mentioned that all other conditions mentioned in its earlier circular shall continue to remain in force.