According to the SEBI mandate, any excess(unutilized) funds in the client's account, have to be transferred back to their bank account at least once in a quarter. SEBI came up with this so as to ensure that the brokers do not misuse the clients' idle funds. However, the broker need not refund the funds in case when the balance is in debit, after blocking 2.25 times of the margin levied for an open position held by the client.
Let us understand the 2nd point with an example. Consider you have Rs.1,50,000 as your trading account fund balance and you have 4 lots of Nifty. Margin required for 1 lot is Rs.25000. Thus for 4 lots the blocked margin would be Rs.1,00,000. Now according to the exchange, the broker can block 2.25 times of the margin i.e. (100000x2.25), which equals Rs.2,25,000.
The funds available in your trading account are only Rs.1,50,000, thus the broker does not have to provide any refund and can mark your account as retained. The broker will have to send the explanation of such retention in a statement, which is called the Retention statement.
In case you had Rs.3,00,000 as your trading account fund balance, the broker would have to refund you with Rs.75,000 i.e. (3,00,000-2,25,000).