Margin Trading Facility
Borrowing to hold shares, with the meter running
Access eligible stocks through a Margin Trading Facility, where you pay a portion of the purchase value while the balance is funded by the broker, subject to applicable terms.
- What it is
- Funded deliveryYou take delivery of the shares; we fund part of the purchase.
- What you pay upfront
- A stated portionIn cash, or as approved collateral after a haircut.
- Where the shares sit
- Pledged in your nameIn a margin funding account, pledged to us as security.
- What it costs to carry
- Interest, dailyOn the funded amount, for every calendar day including holidays.
- Which stocks
- Approved list onlySet by the exchange and by us, and revised from time to time.
- If collateral falls short
- You top up, or we square offWithin the notified window. This is not discretionary.
- Brokerage
- ₹20 per executed orderThe same flat fee as any delivery order, in addition to interest.
The list of approved securities, the margin percentage on each of them, the haircut applied to collateral, the maintenance requirement, the interest rate and the square-off timelines are set by SEBI, the exchanges and our risk policy, and all of them are revised from time to time. This page describes how the facility works rather than the terms applying on any given day. The published tariff sheet, our MTF policy and your contract note are the authoritative record.
Three risks that belong to this product alone. First, the loss is magnified and the cost is certain: a fall acts on the whole position while you funded only part of it, and interest accrues on the funded amount every single day whether the stock rises, falls or does nothing at all. Second, the timetable is not yours: if the collateral value falls below the maintenance requirement you must add funds within the notified window, and if you do not, the position is squared off at whatever price the market gives at that moment, not at a price you would have chosen. Third, a long-term view is no defence: being right eventually does not help if the position is closed in the meantime, and interest keeps running for every day you wait. Trade only with money you can afford to lose, and read the MTF terms and the Risk Disclosure Document before you begin. Nothing on this page is a recommendation to use the facility or to buy any security.
Four things MTF actually is
Every expensive misunderstanding of this product comes from one of these four, and none of them are about which share to buy.
It is a loan, and the shares are the security
You pay part of the purchase and we fund the balance. The shares are delivered into a margin funding account in your own name and pledged to us as collateral for as long as the funded amount is outstanding. You are the owner throughout; what you are not is unencumbered.
Consequence: you cannot sell, transfer or pledge those shares elsewhere until the funding is repaid and the pledge released.
The cost runs on a calendar, not on a session
Intraday funding ends when the session does. MTF funding does not end until you end it, and interest accrues on the outstanding funded amount every calendar day, weekends and holidays included. A position held for three months costs three months of interest whatever the share did in between.
Consequence: the share has to rise by more than the carrying cost before you are even level.
Leverage works on the whole value, both ways
If you funded a quarter of a purchase, a ten percent move in the share is a forty percent move on your money, in whichever direction it happens to go. The gain is magnified, the loss is magnified, and only one of the two comes with a daily interest charge attached to it.
Consequence: a fall that would be uncomfortable in delivery can be an account-level event in MTF.
Someone else can close your position
If the value of the collateral falls below the maintenance requirement, you are called to add funds or securities within a notified window. If you do not, we are required to square off enough of the position to restore the margin, at the market price at that moment, and the loss is crystallised for you.
Consequence: the exit can be decided by a price level and a clock rather than by your view.
Five steps, and the third one is the part people miss
An MTF purchase settles like any other delivery trade. What happens afterwards is what makes it a different product.
How a margin trading facility position is funded, pledged and carried
Five steps from order through funding, pledge, daily interest and mark to market, to repayment, sale or square-off.
Collateral value falls below the requirement, and you are called to add funds. Steps 1, 2 and 5 are yours. Step 4 happens every day, without anyone doing anything, for as long as the position is open. Diagram is schematic; margin percentages, haircuts, the maintenance requirement and the call window are set by our risk policy within the regulatory framework.
Something you decideHappens on its ownThe shares stay in your name throughout, and pledged throughout.
What you can buy, and what you have to put up
None of these numbers are quoted here, because all of them change. What does not change is where each one comes from and what it does to your position.
An approved list, not every stock
The facility is available only on securities permitted under the regulatory framework and further filtered by our own risk policy. The list favours liquid, widely traded shares and it is reviewed regularly; a security can be added, and it can be removed while you are holding it.
Where to look: the current list on the platform before you place the order, not a list you saw last quarter.
The margin percentage differs by stock
How much of the purchase you must fund yourself is not one number across the board. It is set per security according to how volatile and how liquid it is, which means the same rupee order can require quite different amounts depending on what you are buying.
Where to look: the order window shows the requirement for that security before you confirm.
Cash, or securities after a haircut
Your portion can be funded in cash or by pledging securities you already hold. Pledged securities are counted at less than their market value, and that reduction is the haircut. A larger haircut means more collateral is needed for the same funding, and the haircut itself varies by security.
Worth knowing: a part of the requirement usually has to be in cash rather than entirely in collateral.
Marked to market, every evening
The value of everything backing the position is recalculated at the close each day: the funded shares, any pledged collateral and the cash. That recalculation is what decides whether you are comfortably covered, and it happens whether or not you looked at the account that day.
Worth knowing: a fall in the collateral you pledged can trigger a call even when the funded share has not moved.
There is a maintenance level, below the starting one
The margin you must maintain while the position runs is lower than the margin you had to put up to open it. The gap between the two is your breathing room, and the whole practical question in MTF is how large a fall that gap absorbs before you are called.
Worth knowing: the calculator on this page turns those two percentages into the exact fall that triggers a call.
A one-time consent, before anything
MTF is not enabled by default. It requires a separate, explicit consent recorded against your account, after which the product appears in the order window. The terms you accept there, including the interest rate, the square-off policy and how disputes are handled, are the terms that will actually govern the position.
Worth doing: read the MTF terms once, properly, at the point of consent. They are short and they are the whole agreement.
Delivery, MTF or intraday
The share is identical. What differs is who paid for it, how long you may keep it, what it costs you to keep, and who decides when it is sold.
Which product matches what you actually intend to do
Two questions about the position you have in mind. The matching column below is highlighted. This describes how the three products work; it is not advice about what to buy, when to buy it, or whether to use leverage at all.
You intend to keep the shares and you are paying in full, which is the plain, unleveraged case. The shares are delivered into your own demat account on the settlement day and stay there until you sell. There is no interest, no daily mark to market, no margin call and no square-off, ever. This is what almost every long-term holding should use, and it is the benchmark any funded alternative has to beat after costs.
This matches a stated intention to a product type. It takes no view on the security, the price or the timing, it does not consider your financial circumstances, and it is not investment advice. Leverage magnifies losses as well as gains, and interest is payable whichever way the price goes.
Attribute Delivery MTF Intraday
| What it is for | Buying shares to keep | Buying shares to keep, part funded by us | Buying and selling within the same session |
| You pay upfront | The full value | A stated portion, in cash or collateral | The margin the exchange prescribes |
| Shares delivered | Yes, into your demat | Yes, into a margin funding account, pledged | No, the position is closed the same day |
| How long you may hold | Indefinitely | As long as margin is maintained and interest is paid | Until the square-off time |
| Interest | None | Daily on the funded amount, calendar days | None |
| Can the price force an exit | Never | Yes, through a margin call and square-off | Only through the session's own square-off |
| Dividends and bonus | Yours, in full | Yours, though the new shares join the pledge | Not applicable |
| Which securities | Any listed security | The approved list only | As permitted, with exchange margins |
| Can you convert it | Nothing to convert | Yes, by paying the funded amount in full | Yes to delivery, if you pay in full before cut-off |
| Main risk | The company or the market falls | The fall is magnified and interest runs the whole time | A move against you is amplified and the clock runs out |
| Who it suits | Anyone building a holding | Someone who understands financing cost and margin calls | Someone actively trading with a written exit rule |
The honest case for MTF
It is that you have identified something you would buy anyway, the money to pay for it in full is arriving on a known date rather than today, and you have worked out that the interest for that specific gap is a price worth paying. That is a financing decision with a defined end, and it is the version of this product that does not usually go wrong.
The test: can you name the date the funding ends? If not, it is not a bridge, it is a habit.
The case that usually ends badly
It is wanting a larger position than the money allows, and reaching for leverage to get it. The position is then too large by construction, the fall that triggers a call is smaller than anyone expected, and the interest quietly raises the price the share has to reach before any of it was worth doing.
The test: if you would not buy this quantity with your own money, leverage has not made it a better idea.
The conversion that costs people most
Turning a losing intraday trade into an MTF position, because the alternative is booking the loss today. It converts a defined, closed loss into an open one that now charges interest and can be closed for you at a worse price. It is the oldest mistake in the market wearing a newer product.
The test: would you open this position fresh, at this price, right now? If not, do not carry it.
What it costs to carry, and how far it can fall
Both calculators run entirely on figures you type in from the order window and the tariff sheet. Neither knows a price, a stock or your account. Between them they answer the only two questions this product really poses.
Run both tabs on the same position before you open it. The first tells you how much the stock has to rise before the trade was worth doing at all, and that number grows every week you hold. The second tells you how small a fall puts somebody else in charge of when you sell. If the first number is larger than you expected the stock to move, or the second is smaller than the stock routinely moves in a bad month, the position is too large. That conclusion costs nothing today and a great deal later.
How a margin call actually runs
The sequence is the same every time and none of it is discretionary. Knowing the order of events is what turns a frightening message into a decision you have already thought about.
Everything backing the position is revalued: the funded shares, the securities you pledged as collateral after their haircut, and the cash. That figure is compared against the margin you are required to maintain. Nothing in this step depends on you having looked at the account.
If the valuation is below the requirement, the difference is a shortfall. It can be caused by the funded share falling, by the collateral you pledged falling, or by a change in the haircut or the margin percentage for that security. All three produce the same result.
The call reaches you on the contact details registered on your account, by more than one channel, with the amount and the deadline stated. This is why the mobile number and e-mail on the account need to be ones you actually read, and why a changed number should be updated the day it changes.
You can add cash, pledge further approved securities as collateral, or reduce the position yourself by selling part of it. Selling some of it yourself is often the calmest of the three, because you choose which shares go and at what price rather than leaving both decisions to a system.
We are required to sell enough of the position to restore the margin. It happens at the market price at that moment, which in a falling market is rarely a good one, and the realised loss is yours. Any shortfall remaining after the sale is a debit on your account.
The contract note records the square-off like any other sale, with every charge listed separately, and interest stops accruing on the portion that was repaid. Repeated shortfalls can lead to the facility being restricted or withdrawn on your account, which is set out in the terms you consented to.
Four ways out, and only three of them are yours
An MTF position does not stay open indefinitely by accident. It ends one of these four ways, and it is worth knowing in advance which one you are aiming at.
You pay the funding off in full
The cheapest ending, and the one to aim atYou repay the outstanding funded amount, the pledge is released, and the shares move into your ordinary demat holding where they cost nothing at all to keep. The position stops being an MTF position and becomes a plain investment.
- It can be done at any time, in part or in full, and does not need a reason.
- Interest stops accruing on whatever you repay, from the day you repay it.
- The shares are unencumbered afterwards, so you can sell, transfer or pledge them elsewhere as you wish.
What to do about it
- Repay as soon as the money is available, not when you remember
- Partial repayment is allowed and reduces the interest proportionally
- Check that the pledge release has reflected in the depository statement
- Note the date the funding ended, for your own records
Almost nobody plans this ending and then forgets to execute it, but a great many people never plan it at all. Funding with no intended end date is the one variant of this product that reliably costs more than it was ever expected to.
Square-off timelines, the margin call window, the treatment of a residual debit and the circumstances in which the facility may be restricted are set out in our MTF terms and in the regulatory framework, and both are amended from time to time. Nothing here is a recommendation to open, hold or close any position.
Six ways this goes wrong, none of them unusual
The share falling is not on this list. That is the risk everybody signs up for. These are the ones that turn a manageable fall into a serious one.
Sizing the position by what the margin allows
The order window will happily let you buy four times what you could pay for. That is a statement about the funding, not about how large the position should be. A position sized by the limit rather than by the risk is too large before the first day is out, and every other problem on this list follows from it.
Check: size it by the rupees you are prepared to lose, then see whether funding is even needed.
Underestimating how fast the trigger arrives
People estimate the fall they can absorb by subtracting the maintenance percentage from their own contribution, and that is not how the arithmetic works. The funded amount does not shrink when the share does, so only your portion absorbs the fall, and the trigger is reached considerably sooner than the subtraction suggests.
Check: use the second calculator on this page rather than the subtraction in your head.
Forgetting that the collateral can fall too
If you pledged shares to fund your portion, you now have two positions moving against you at once in a broad market fall: the funded share and the collateral behind it. The shortfall arrives faster than the funded share alone would suggest, and it arrives on exactly the day everything is already unpleasant.
Check: cash collateral does not fall. It is worth the opportunity cost for precisely this reason.
Not reading the call
The window to respond is short and it starts whether or not you saw the message. A stale mobile number, an e-mail going to a folder nobody opens, or a few days away without checking, and the first you know of it is the square-off contract note. The obligation to respond does not depend on the message having been read.
Check: confirm the contact details on the account today, and again whenever they change.
Letting a bridge become a mortgage
MTF used to cover a few weeks until money arrives is a financing decision with an end date. The same position eighteen months later, with nobody having decided to keep it, has quietly cost a large multiple of what anyone intended, and the share now has to have risen substantially before the exercise broke even.
Check: write the end date down when you open it, and convert or close on that date.
Rescuing a losing position with more leverage
Averaging down on a funded holding increases the exposure, increases the interest and lowers the price at which the whole thing is squared off. It feels like conviction and it is arithmetic working against you on three fronts at once. This is the single most reliable way to turn a bad trade into a bad year.
Check: if the answer to a margin call is a larger position, the answer is wrong.
Every line, what it is charged on, and who charges it
Rates move with circulars, with the Finance Act and with our own tariff, so the table gives you the structure and tells you where the current figure is published. On this product the line that matters most is the one charged by the day.
| Line item | Calculated on | Levied by | Where the current rate is published |
|---|---|---|---|
| Interest on funding | The outstanding funded amount, for every calendar day it is outstanding, including weekends and holidays. | Yukti | The published tariff sheet |
| Brokerage | Nothing. It is a flat amount per executed order, on the buy and again on the sale. | Yukti | ₹20 per executed order |
| Pledge and unpledge charges | Each pledge or release instruction processed at the depository. | Depository | The published tariff sheet |
| Securities transaction tax | The traded value, at the notified rate for a delivery transaction, on the buy and on the sale. | Government | Notified rate, in the Finance Act |
| Exchange transaction charge | Turnover, at a rate that differs between the exchanges. | NSE or BSE | Exchange circular, revised periodically |
| SEBI turnover fee | Turnover. | SEBI | SEBI circular |
| Stamp duty | The buy side only. | State | Uniform rates notified under the Stamp Act |
| Goods and services tax | Brokerage, interest and the transaction and regulatory charges, not the traded value. | Government | Prevailing GST rate |
| Depository charge | Each scrip sold from demat on a given day, regardless of quantity. | Depository | The published tariff sheet |
| Square-off costs | The same brokerage and statutory charges as any sale, on a sale you did not choose to make. | Various | As above, at actuals |
Interest is debited to your ledger on the basis set out in the MTF terms and appears in your account statement rather than on the contract note, which is why it is the cost people most often leave out of their own arithmetic. The contract note remains the authoritative record of what was charged on each trade.
Two minutes now, or a square-off later
The calculators above turn the margin percentage from the order window and the rate from the tariff sheet into the two figures that decide whether this position is sensible: what the share must do before you are level, and how small a fall puts the timing in somebody else's hands.
How the tax on a funded holding is put together
Rates and holding-period boundaries are set in the Income-tax Act and amended by each Finance Act, so they are not quoted here. The structural points below are the ones that surprise people who have only ever held shares outright.
The holding period runs normally
Shares bought through MTF are delivered to you, so the clock starts on the purchase date exactly as it would on an ordinary delivery trade, and the short-term and long-term treatment applies in the usual way. Being funded does not change what kind of gain it is.
Check the current figures in: the Finance Act for the relevant year, or with a chartered accountant.
Interest is not automatically deductible
This is the point worth getting advice on. Interest paid on money borrowed to buy shares is not simply added to the cost of acquisition for a capital gains computation, and whether it is deductible at all depends on how your activity is classified and on the facts of your case. Do not assume it reduces the gain.
Ask a professional: the answer genuinely differs between an investor and someone whose activity is treated as a business.
Dividends are taxed as they always are
A dividend on a funded holding is yours, is added to your income and is taxed at the rate applicable to you, with tax deducted at source above a threshold. That the shares were pledged makes no difference to the dividend or to how it is taxed.
Practical effect: the dividend does not reduce the funded amount unless you actually use it to repay.
A square-off is a sale like any other
Shares sold to meet a margin shortfall are sold on the market in the ordinary way, and the gain or loss is computed exactly as it would be on a sale you chose to make. There is no special treatment for a disposal that was forced rather than intended.
Practical effect: the loss is real, it is deductible against gains under the usual rules, and the contract note is the record.
Losses are not wasted
A capital loss can be set off against capital gains under rules that distinguish short-term from long-term, and what cannot be used in the year can generally be carried forward for a number of years, provided the return is filed within the due date.
Practical effect: file on time even in a year you made nothing, or the carry-forward is lost.
This is a description of how the tax treatment is structured and is not tax advice. Rates, thresholds, holding periods and the deductibility of interest depend on the law in force for the relevant year and on your own circumstances, including whether your activity is assessed as investment or as business. Please consult a qualified tax professional.
The margin funding glossary
Every term you will meet in the MTF terms, on a margin call message or in your ledger, defined in one or two sentences. Type to search, or jump by letter.
All 52 terms.
A further requirement imposed on top of the ordinary one, usually when a security becomes more volatile or when the exchange raises the requirement across the board.
The list of shares on which the facility is available, permitted under the regulatory framework and further filtered by the broker's risk policy. It is reviewed regularly and a security can be removed while you hold it.
The sale of part or all of a funded position to restore the required margin after a shortfall has not been made good within the notified window.
What is left of your margin after existing positions are accounted for. It is the figure that decides whether a new order can be placed at all.
The person in whose name shares are actually held at the depository. On a funded position that is you, even though the shares are pledged.
The portion of a purchase paid for by the broker under the facility, on which interest accrues until it is repaid.
The period within which a margin shortfall must be made good. It is set out in the MTF terms and runs whether or not the message was read.
The total interest paid for holding a funded position, which grows with every calendar day the funding is outstanding.
The part of the margin requirement that has to be met in cash rather than by pledging securities.
Assets backing the funded amount: the funded shares themselves, plus any other approved securities you pledge, valued after their haircut.
The separate, explicit authorisation recorded against your account before the facility is enabled. It carries the terms that govern the funding.
The periodic statement the depository sends you directly, listing everything you hold across demat accounts, including the funded shares and the pledge against them.
The authoritative document issued for each trade day, listing every trade and every charge separately by name. Interest appears in the ledger rather than here.
Paying off the funded amount so that the pledge is released and the shares move into your ordinary demat holding.
The ordinary product in which you pay the full value and the shares are credited to your demat account with nothing owing.
The account at a depository in which shares are held electronically in your own name. Funded shares sit in a separate margin funding account of the same kind.
The value of the position divided by the money you put up. It is the multiple by which a price move acts on your own capital, in both directions.
The total value of the positions backed by your margin. Leverage means it is larger than the money you have committed.
Money in the account that is not already committed to a margin requirement. It is what a shortfall can be made good with immediately.
The money lent to you for the purchase. It does not fall when the share does, which is why a fall is absorbed entirely by your own portion.
The maximum funding the broker will extend, overall or against a single security. It is set by risk policy and can be reduced, including on a position you already hold.
The regulatory categorisation of listed securities by liquidity and impact cost, which determines among other things which of them may be funded.
The reduction applied to the market value of pledged securities when counting them as collateral. A larger haircut means more collateral for the same funding.
The portion of the purchase you must fund yourself at the outset. It is set per security according to its volatility and liquidity.
The charge on the outstanding funded amount, accruing every calendar day including weekends and exchange holidays, at the rate on the published tariff sheet.
The product for positions opened and closed within the same session, on exchange-prescribed margin, with an automatic square-off before the close.
The running statement of your account, where interest is debited and where the funded balance is visible. It is not the contract note.
Using borrowed money to hold a larger position than your own funds would allow. It magnifies the gain, the loss and nothing else.
Selling a position to recover the funded amount, whether chosen by you or carried out under the terms after a shortfall.
The margin you must keep while the position runs, lower than the initial requirement. The gap between the two is the fall the position can absorb.
The notice that the collateral has fallen below the maintenance requirement and that funds or securities must be added within a stated window.
The demat account in your own name into which funded shares are delivered and in which they are held pledged.
The daily revaluation of everything backing the position at the closing prices, which is what identifies a shortfall.
The margin trading facility: taking delivery of approved securities while paying only part of the value, with the broker funding the balance against the shares as collateral.
An unrealised loss on an open position, at the present price. It becomes real when the position is closed, whether by you or under the terms.
The movement of funds and securities on the settlement day. A funded purchase pays in like any other delivery trade, with part of the money coming from the broker.
The charge created over the funded shares in favour of the broker, recorded through the depository with your confirmation, for as long as the funding is outstanding.
The onward pledge of client securities within the framework permitted by the regulator, recorded at the depository and traceable.
Any amount still owed after a square-off has been completed. Leverage means the loss is not capped at the money you put up.
The broker's own rules on which securities are funded, at what margin, with what haircut and on what square-off timeline, applied within the regulatory framework.
The periodic return of unused credit balances from the trading account to your bank account, on the cycle prescribed by the regulator.
The exchange of money for securities after a trade, on the cycle notified by the exchange. A funded purchase settles like any other delivery trade.
The difference between the value of the collateral and the margin required. It can be caused by the funded share falling, the pledged collateral falling, or a change in margin or haircut.
Closing a position by trading the opposite side of it. On this product it can be done by you or, after an unmet call, under the terms.
The settlement cycle for the cash market, under which funds and securities move on the trading day after the trade.
The published schedule of the broker's own charges, including the interest rate applicable to funded positions.
Adding cash or pledging further approved securities to make good a shortfall and restore the required margin.
The release of the charge over the shares once the funded amount is repaid, after which the shares become ordinary unencumbered holdings.
The margin that must be available before the order is placed rather than collected afterwards. It is what the order window checks against.
The evening computation of what everything backing the position is worth, against which the maintenance requirement is tested.
How much a price moves around. It drives the margin percentage and the haircut applied to a security, and it decides how often a call is likely.
Not a regulatory term. The date you decide in advance that the funding will end, written down when the position is opened, which is the single most useful habit on this product.
Commonly asked about MTF
How long can I keep an MTF position open?
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Do I actually own the shares?
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What exactly triggers a margin call?
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What are my options when a call arrives?
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Can I convert an MTF holding into an ordinary one?
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Is MTF available on every share?
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How is the interest calculated, and when is it charged?
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What if the square-off does not cover what I owe?
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Can I use MTF for a long-term investment?
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How do I turn MTF off?
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