What happens to investors’ funds and holdings if a stockbroker goes bankrupt?
Find out what happens to your shares, cash, and open positions if your stockbroker goes bankrupt and how India's Investor Protection Fund keeps you safe.
If a broker fails / goes bankrupt:
- Shares: Your stocks stay safe in your demat account with National Securities Depository Limited (NSDL) or Central Depository Services Limited(CDSL). You can transfer them to another broker.
- Cash in trading account: Protected under rules of Securities and Exchange Board of India. If funds are missing, exchanges like National Stock Exchange of India or Bombay Stock Exchange may compensate through the Investor Protection Fund (up to ~₹35 lakh)
- Open positions: Exchanges may square off open trades to reduce risk.
- Account transfer: Investors can move their demat holdings to another broker.
- What You May Need to Do
- File a claim with the stock exchange.
- Transfer your demat holdings to another broker.
- Provide proof like ledger statements, contract notes, and demat statements.
