A Settlement Cycle refers to a calendar according to which all purchase and sale transactions done on T Day are settled on a T+2 basis. T = Trading Day and +2 means 2 consecutive working days after T (excluding all holidays).
It simply means that if the customer buys share on 3rd Sept 2012 = T, Then the transaction will be settled on 5th Sept 2012 = T+2 . At NSE and BSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working day.