India's stock settlement now fastest in the world

System has currently been started for 25 stocks and the trade will need to be done upto 1:30 pm on every working day

By HP Ranina/NRI Biz Matters

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Published: Tue 16 Apr 2024, 6:57 PM

Last updated: Fri 26 Apr 2024, 10:45 AM

Question: I believe that the stock settlement system in India has now become the fastest in the world. Is this true and what is the modus operandi which an investor needs to adopt? What are the advantages of the system?

ANSWER: From April 4, the world’s fastest stock trading and settlement service system on the Bombay Stock Exchange and National Stock Exchange has commenced. Under this system, the buyer gets the securities and the seller gets his money on the same day. Intermediaries like clearing corporations of exchanges and brokers will also get their money on the same day. This system has currently been started for 25 stocks and the trade will need to be done upto 1.30 pm on every working day.

Prior to this, the T+1 settlement system was in force in which the buyers got the stocks in their demat account on the working day immediately following the day of the trade. Likewise, sellers got their funds after one day of trade. It is therefore expected that the T+0 settlement system will ensure that buyers, sellers and intermediaries will stand to gain as no money will remain idle and there will be no risk for buyers who will get their securities immediately.

The new settlement cycle is optional for investors and it will have a separate trading window which will end at 1.30 pm. Brokers who have been selected by the Securities & Exchange Board of India will be able to offer this settlement system to their clients.

Question: The insurance business in India has been digitised according to media reports. I would like to know more about it and how it will benefit millions of insurance product users.

ANSWER: The Insurance Regulatory & Development Authority of India has approved the setting up of an electronic marketplace which will serve as a digital public platform. This is proposed to be owned by several insurance companies. This marketplace is called Bima Sugam which will allot insurance account numbers to customers. Once this is done, a customer will be able to port his policy from one company to another. Insurance companies would be able to plug into the platform through API (Application Programming Interface) to service claims. Online distributors would also be part of this electronic platform. In short, the marketplace will serve as a one-stop solution for all insurance stakeholders including customers, insurers, intermediates and agents. This will promote transparency, efficiency and collaboration across the entire insurance value chain. The ultimate aim is to democratise e-commerce in insurance by allowing both small players and large companies to sell their products on the same platform. Small businessmen will be supported by service providers for logistics and other requirements.

Question: Jewellery manufacturing is a big business in India. Export of jewellery is also increasing. Indian artisans are known for their skill and talent. Will they be affected by the recent trend of using machinery for increasing productivity levels?

ANSWER: Indian artisans are known for their skill and creativity. They will therefore be employed increasingly as the demand for Indian jewellery goes up globally. Exports are showing a rising trend. However, the availability of skilled artisans is under pressure as more and more younger members of families who have been traditionally involved in jewellery making are now moving towards other careers. As a result, manufacturers of branded jewellery are trying to fill the skill gap by using robots which are involved in chain making, polishing and casting.

The use of robots has resulted in an increase in productivity levels and the final product is able to achieve artistic precision. In fact, the enhanced productivity is more than twice in comparison to what is achieved when conventional methods are employed by artisans. Moreover, jewellery makers who are using robots and automation systems in the manufacturing process are able to maintain uniform quality in jewellery production. Ancillary tasks like cleaning and mould handling have also been automated.

Therefore, fast selling products like plain hoops, wedding bands, engagement rings and bangles are increasingly being produced by robots. Likewise, gift items during festival season are being made with retrofitted machines. In short, automation has ensured error free processes, reducing wastages, doubling productivity and maintaining a consistent quality across products.

HP Ranina is a practising lawyer, specialising in corporate and tax laws of India.

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