Terms and Conditions for Availing Trading Supported by Blocked Amount via UPI

GENERAL:

The Unified Payments Interface (“UPI”) is a payment platform built by National Payments Corporation of India (“NPCI”) that allows instant online payments between the bank accounts of any two parties. UPI offers an architecture and a set of standard Application Programming Interface (“API") specifications to facilitate these online payments. It aims to simplify and provide a single interface across all NPCI systems besides creating interoperability and superior customer experience.

These terms and conditions (“Terms”) govern and regulate the client’s use of a payment process for trading in secondary market, allowing the clients to block funds in their bank account using UPI in the favour of Clearing Corporation (“CC”), for getting the margin, instead of transferring them upfront to the trading member account till the expiry date of the block mandate or till block is released by the CC, or debit of the block towards obligations arising out of the trading activity of the investor, whichever is earlier. (“UPI Block Facility”). These Terms shall be read in conjunction with the principle Terms and Conditions of the Platform, FAQs on UPI Block Facility hosted on the Platform circular number: SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/99 dated June 23, 2023 prescribed by Securities Exchange Board of India (“SEBI Circular”), and such other circulars as shall be issued thereafter by the SEBI and Exchanges from time to time.

Please note that the mobile application under the name and style of “Kotak Neo” and website having the domain name ‘https://www.kotaksecurities.com/platform/kotak-neo/' (collectively referred to as the “Platform”) is owned, managed and operated by Kotak Securities Limited, a public unlisted company incorporated under the provisions of the Companies Act, 2013, bearing CIN: U99999MH1994PLC134051, having its registered office at C 12, Bandra Kurla Complex Road, G Block, Bandra Kurla Complex, Bandra East, Mumbai, Pin- 400051, Maharashtra. (hereinafter collectively referred to as the “Company”, “We”, “Us”, or “Our”). The Company is a registered mutual fund distributor bearing AMFI ARN: 0164, SEBI Registration No. INZ000200137 (Member of NSE, BSE, MSE, MCX & NCDEX), PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-629-2021.

For the purpose of these Terms herein above, wherever the context so requires the term “You”, “you” “Your”, “your”, or “User”, shall mean and include those clients registered on the Platform who, at their discretion, want to register to avail UPI Block Facility (“Client”).

These Terms are an electronic record in terms of the Information Technology Act, 2000 and rules made thereunder as applicable. The Terms is (i) published in accordance with the provisions of Rule 3(1)(a) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and (ii) generated by a computer system and does not require any physical, electronic, or digital signatures by KSL.

IN CASE YOU DO NOT AGREE WITH THESE TERMS, THEN PLEASE REFRAIN FROM PROCEEDING WITH UPI BLOCK FACILITY ON THE PLATFORM.

SCOPE OF SERVICE:

You agree and acknowledge that the payment transactions or any communication/offers carried out through our Platform for the purpose of UPI Block Facility are solely between the User, CC, sponsored banks or NPCI or any other third part, as the case may be. You agree and acknowledge to the following:

(a) KSL, as a broker, is only a facilitator of payment transactions;

(b) KSL is not a party to these payment transactions;

(c) KSL is not and will not be responsible for any communications made by You or any communication or offers made to You through Platform by any third party;

(d) KSL is not responsible for any act/omission of the User/Client, including, non-completion of the transaction.

(e) Any facilitation of transaction using our Platform does not guarantee any sufficiency of funds in the Client’s bank account.

REGISTRATION PROCESS AND OTHER REQUIREMENTS:

1. Please follow the registration process for UPI Block Facility as provided in the FAQs here

2. Please note that permanent account number (PAN) shall be mandatory for availing the UPI Block facility. and Exchanges vide UPI/NPCI shall verify that the PAN maintained in Unique Client Code (UCC) database with PAN of first holder with the bank where User account is held. Exchanges shall similarly verify the PAN maintained in the (UCC) database with the PAN of the first holder in the demat account with the depositories. It is hereby clarified that the Users will be allowed to avail the UPI Block Facility only after successful validation of both bank account and demat account of the User. It is further clarified that accounts wherein PAN details are not available with the banks / depositories accounts, the same cannot be registered and would not be able avail the UPI Block Facility.

3. The registration requests received by 21:00 hours on a “T” day and subject to successful validation will be effected from T+2 day (BOD). The requests received after 21:00 will be effected from “T+3” day, subject to successful validation

DE-REGISTRATION:

The Client can deregister from further availing the UPI Block Facility by sending an email to service.securities@kotak.com. The request of the client shall be processed after due authentication by KSL and discharge of all the obligations of the Client towards KSL or any other member or third party. The deregistration process shall be subject to the approval of the designated CC of the clearing member (“CM”) in the equity cash segment. The de-registration requests received by 21:00 hours on a “T” day and subject to successful validation will be effected from T+2 day (BOD). The requests received after 21:00 will be effected from “T+3” day, subject to successful validation. Additionally, it is hereby clarified that after the Client has de-registered from the UPI Block Facility the Client may have an option to use other payment options such as UPI, Net banking, NEFT/RTGS/IMPS to trade subsequently. However, upon de-registration from UPI Block Facility the Client may not be able to use the UPI Block Facility.

HANDLING OF SHORTAGE:

In the event, the funds pay-in requirement on account of trades executed by clients cannot be met through the UPI block amount by the cut-off time, the same shall form part of the consolidated funds pay-in obligation of the CM (net/ gross, as the case may be). This shall include STT and stamp duty requirements but exclude the TM (“Trading Member”) charges.

In the event, if adequate securities are not provided as early pay-in through the UPI block mechanism by the cut off time, the CC shall treat the securities short delivered and calculate the valuation debit amount in lieu of the securities, the valuation debit amount will be:

(a) First adjusted against the pay-out due to the Client.

(b) Any residual amount will be recovered by the debit to the UPI block of the Client to the extent of availability.

(c) Any residual amount shall be recovered from the CM.

The CC shall conduct an auction to purchase the securities delivered short. Incremental amount of auction pay-in over the valuation debit amount shall be recovered from the UPI block amount, and any residual amount shall be debited to the CM.

In case of shortfall on account of reasons such as attachment or debit freeze on customer account the obligation shall devolve on the respective CM.

RECOVERY OF SHORTAGES BY MEMBER:

The following procedure shall be followed in case of funds shortage:

The CC shall provide pay-out to the Client primary demat account and instruct the depository to auto-pledge the securities to the CM’s “client unpaid securities pledgee account.”

CC shall maintain the shortage amount of Client. The obligation shall devolve on TM’s CM, who will settle the same with the CC.

If Client provides additional UPI blocking subsequently, the CC shall debit the amount to the extent of shortfall and provide the same to the CM.

In the event the Client fails to provide the amount, then CM can invoke and sell the shares. Out of the pay-out due to the client, amount to the extent of shortfall shall be paid to the CM who fulfilled the obligation. The remaining funds, if any, shall be paid out to the Client. If the sale proceeds are not sufficient to meet the shortfall, then the short amount of the Client will be revised to the extent of sale proceeds, which will continue to be maintained by the CC till recovered completely. Such shortfall amount may adjusted towards any future funds pay-out, or any UPI block created in future, and revised appropriately.

Alternatively, the CM may also recover the shortfall by selling securities provided by Client through the margin pledge mechanism. CM shall use the respective Client’s UCC to sell such securities. CM shall invoke the margin pledge towards the delivery obligation of the Client. On invocation, the securities shall be marked for early pay-in using the block mechanism in the Client’s demat account. As per the process described, the securities will be used towards pay-in obligation of Client. The pay-out due to the Client will be first utilized towards the shortfall amount and residual amount if any, shall be credited to the Client’s account, similar to the process described earlier.

The shortage amount of the Client, as maintained above, will be reset to zero if the Client de-registers from the UPI Block Facility.

The following procedure shall be followed in case of securities shortage:

(a) Funds pay-out will not be provided to the client. The amount will be utilized by CC towards auction pay-in/valuation debit.

(b) If the funds pay-out due to the client is greater than valuation debit, the same shall still be retained for utilization towards auction pay-in/square-off.

(c) If valuation debit is in excess of funds pay-out, such additional amount will be debited from block amount of Client. In case of shortfall, the same will be collected from CM.

(d) Auction will be conducted to buy the short securities by the CC (except in cases of direct closeout)..

(e) Auction pay-in, in excess of valuation debit (due to auction success or close-out, as the case may be) will be debited first from remaining pay-out due, if any, followed by the Client block amount. In case of shortfall, the same will be collected from the CM. In case the auction debit is less than valuation price, the difference will be credited to Core SGF.

(f) In case of any shortfall collected from CM, the short amount of client will be maintained and in case any blocking is done in future, the block will be debited to the extent of shortfall and provided to the CM.

In case the CC is unable to process funds payout to a bank account of the Client for any reason, the same will be withheld with the CC until the resolution of the problem. The payout will not be provided to the member. The CC will maintain a designated account for such retained pay-out. Similarly, in case of inability to process securities pay-out to the depository account of the client, such payout shall be withheld by the CC in its pool account. The clients will be expected to rectify the issue with the account or request the TM to update the primary account details in the UCC database. The CC will periodically attempt to credit the payout to the primary account.

PAYOUT OF FUNDS AND SECURITIES TO THE CLIENTS USING THE FACILITY:

Any funds pay-out due to the Clients using the UPI Block Facility shall be provided by the CC directly in the primary bank of the Client, as maintained in the UCC database.

The CC will instruct depositories to transfer any securities pay-out to the Clients using the UPI Block Facility to the primary demat account of the Clients as maintained in the UCC database. Depositories shall transfer the securities to Client’s primary demat account along with appropriate entries recorded in the CM/TM pool account. The CM/TM will not have control over such securities at any time.

ELIGIBILITY AND LIMITATIONS:

The Client agrees, including but not limited to, the following limitations in relation to the use of UPI Block Facility. The said limitation shall be subject to revisions by KSL from time to time at their sole discretion:

1. The Client shall include only resident individuals and Hindu Undivided Family (HUF). The individuals and HUFs settling their trades with KSL shall only be eligible to avail the UPI Block Facility. If such Client have appointed a custodian CM to clear their trades, they shall not be eligible to avail the UPI Block Facility.
2. The UPI Block Facility shall be available to the Client only in the equity cash segment.
3. The Client cannot trade in Future and Options (Commodity, Currency, Equity F&O, Interest Rate Futures) and margin trade facility using UPI Block Facility.
4. The Client cannot avail the margin trading facility, once the Client has availed the UPI Block Facility.
5. The Client cannot use any other payment method to avail the margin, once a Client has registered to use the UPI Block Facility on our Platform,
6. The maximum limit for single block is INR 5,00,000/- (Indian Rupees Five Lakhs Only) and the total maximum limit for a day is upto INR 15,00,000/- (Indian Rupees Fifteen Lakhs Only). However, multiple blocks can co-exist subject to the overall limit applicable in UPI.
7. Clients registered for the facility shall be permitted to provide collateral only in the form of UPI block. The client cannot pledge shares or avail benefit from any existing pledged/repledged shares to get the margin benefit through UPI Block Facility.
8. The use of UPI Block facility does not support Intraday(MIS) and Normal margin trade (NRML).
9. KSL shall at its own discretion choose to provide the UPI Block Facility only to a select group of Clients. Further, KSL may revoke the said UPI Block facility at any point of time (subject to availability of other payment methods) with or without any prior notice to Client and Client confirms not to hold KSL liable for any liability, claim or losses on account of the same.
10. The UPI Block Facility is supported only for the Clients having bank accounts with banks forming part of the approved list of banks for UPI block by NPCI.

USER UNDERTAKING:

The User undertakes, authorizes, confirms and agrees to/that:

1. Give consent to the Terms and Conditions herein by online mode by logging-in on the Platform of KSL in a secured manner.
2. KSL at all times shall have the liberty to exercise its right in its sole discretion to determine the extent to which the UPI Block Facility to be made to the Client.
3. UPI block can be created in favor of CC by the clients only from their accounts with the banks that form part of the approved list of banks for acceptance of UPI block. CC shall monitor its exposure towards banks inclusive of UPI block amount, in addition to other exposure. The CC shall perform necessary validations and process the release requests on immediate basis.
4. Any funds pay-out due to the clients arriving out of sale transactions shall be provided by the CC directly in the primary bank account of the client, as maintained in the UCC database. In the event that the CC fails to credit funds into the client's account, KSL shall not be held liable for such failure. Responsibility for crediting funds rests solely with the CC.
5. CC will instruct depositories to transfer any securities pay-out to the clients using the UPI Block Facility to the primary demat account of the clients as maintained in the UCC database. Depositories shall transfer the securities to client’s primary demat account along with appropriate entries recorded in the CM/TM pool account. The CM/TM will not have control over such securities at any time.
6. The UPI Block Facility shall be provided only in respect of shares permitted by the SEBI/ Exchanges / KSL from time to time.
7. The terms / conditions / Obligations of the Client shall be amended as specified by SEBI / Exchanges / KSL from time to time.
8. Any dispute arising between the Client and KSL in connection with the UPI Block Facility, shall be referred to the investor grievance redressal mechanism, arbitration mechanism of the respective stock exchange.
9. The UPI Block Facility is subject to other restrictions such as amount, number of instructions etc. specified by NPCI-UPI or the customer’s bank, as the case may be, and the Client shall not hold KSL responsible for any loss, liability due to delay/non-execution of the UPI Block Facility, due to any factors which are beyond the reasonable control of KSL. The Client shall raise any issues with respect to the delay/failures during block creation to the Client’s banker or to NPCI.
10. The Client has an option to de-register from the said facility basis the written request received from the client. The request of the client shall be processed after due authentication by KSL and shall be raised to the CC for approval. Upon approval by the CC, the clients UPI Block Facility shall stand de-registered. A TM may deregister a client at the request of such client, or in case the client does not meet, the conditions set by the TM for participation in the facility.
11. The Client shall not hold KSL responsible or liable for, any actions, claims, demands, and losses damages, costs, charges and expenses etc act or omission in facilitation of the UPI Block Facility.

FEES AND BROKERAGE:

The Client agrees to pay KSL all brokerages, transaction charges, commissions, fees, GST, and other taxes or levies, by whatever name so called, as informed to the Client by KSL from time to time in writing. KSL shall be entitled to deduct such fees or levies from the Client’s account or trading ledger, in lieu of the services received by the Client from KSL. All transactions executed via the UPI block facility shall incur a brokerage fee of 0.5%. In the event that any instance of overcharging beyond the stipulated brokerage fee is identified, such discrepancies will be rectified and settled as per SEBI's prescribed settlement cycles.

All brokerages, transaction charges, commissions and fees listed on KSL's Platform are subject to change from time to time, in compliance with the rules prescribed by the Exchanges and SEBI, and at KSL’s discretion as per its business practices. KSL shall notify the Client with details of any changes with respect to such brokerages, transaction charges, commissions and fees, along with the dates upon which such charges shall become effective. KSL shall inform Clients of any such changes through an email and/or SMS sent to the Client’s registered email ID and contact number.

LINKS TO THIRD PARTY WEBSITES:

The links on the Platform led to third party websites, platforms, content, services and or products (collectively “Third-Party Site”) are provided solely as a convenience to you. Including a link to a Third-Party Site does not constitute or imply endorsement by, or affiliation with any Third-Party Site, including its operator or its contents, services and/or offerings. If you use these links, you may leave the Platform. We are not obligated to review such Third-Party Site, does not control such Third-Party Site, and is not responsible for them. Thus, We do not endorse or make any representations about such Third-Party Site including any information, software, products, services, content or materials found there or any results that may be obtained from using them. If you decide to access any of the Third-Party Site linked to from the Platform, you do this entirely at your own risk. It is your responsibility to read and understand the terms and conditions/policies provided on the Third Party Site and KSL shall not be responsible for the same.

GOVERNING LAW:

These Terms and the rights and obligations thereunder and the relations of the parties and all matters arising under or in connection with these Terms, including the construction, validity, performance or termination thereunder, shall be governed by and construed in accordance with the laws of the Republic of India. The courts in Mumbai, Maharashtra shall have exclusive jurisdiction over all matters connected with hereof.

FORCE MAJEURE:

KSL and/or the Platform shall not be liable to You for its failure to perform or for delay in providing You access to Your account or to the UPI App or any services thereof, to the extent such failure or delay results from causes beyond its reasonable control, including, without limitation, acts of God, fires, explosions, wars or other hostilities, insurrections, revolutions, strikes, labour unrest, earthquakes, floods, pandemic, epidemics or regulatory or quarantine restrictions, unforeseeable governmental restrictions or controls or a failure by a third party hosting provider or internet service provider or on account of any change or defect in the software and/or hardware of Your computer system.

DISCLAIMERS: The services, including all content, software, functions, materials, and information made available on, provided in connection with or accessible through the services, are provided "As is." to the fullest extent permissible by law, KSL and its group companies make no representation or warranty of any kind whatsoever for the services or the content, materials, information and functions made accessible by the software used on or accessed through the services, or for any breach of security associated with the transmission of sensitive information through the services. KSL disclaims without limitation, any warranty of any kind with respect to the services, noninfringement, merchantability, or fitness for a particular purpose. KSL does not warrant that the functions contained in the services will be uninterrupted or error free. KSL shall not be responsible for any service interruption (including, but not limited to, power outages, system failures or other interruptions that may affect the receipt, processing, acceptance, completion or settlement of transactions) that you may face on the platform whether or not caused by KSL.

AMENDMENTS TO THE TERMS:

We reserve the right to change, modify, amend, or update the Terms hereof, at our discretion, from time to time without any notice. The amended provisions of these Terms shall be effective immediately upon being posted/ uploaded on the Platform. Your continued use of the Platform shall be deemed to signify your acceptance of these provisions or amended provisions of these Terms of Use.

The general terms and conditions and any amendments thereof made by KSL, from time to time, is available on companies’ website