Which stocks and mutual funds can be pledged with Zerodha for collateral margins? (2024)

FAQs

What can be given as collateral in Zerodha? ›

The equity collateral margin represents the margin received against pledged stocks, ETFs, and mutual funds after deducting the haircut. Traders can utilize collateral margins for trading futures, selling options, and conducting intraday equity trades.

Yes, Zerodha provide margins on Liquid mutual funds. To learn more, see How to pledge mutual fund investments to get collateral margins?

Can a Mutual Fund Be Pledged? Yes, investors can use their mutual fund units as collateral to obtain loans from lenders such as banks & non-banking financial companies (NBFC). Investors will have to pledge their mutual fund units in favour of the loan provider, who then sets up a lien or legal claim over those units.

Zerodha processes pledge requests at 2:00 PM and 5:00 PM only on days when the equity market is open. The list of approved instruments that can be pledged for margins and the applicable haircut % can be found in this list (DOC).

NABARD, Sovereign Gold Bonds, and a few other government bonds can be used as collateral to avail of a loan. How much loan is available: The loan-to-value varies depending on the lender and type of security.

Collateral Items

A borrower may pledge physical assets, such as equipment, machinery, real estate, buildings, or inventory, or it may pledge trade receivables, such as the value of the company's accounts receivable, which represents money owed to the company.

While mutual funds cannot be purchased on margin, they can be used as collateral for margin purchases of other securities in some cases. Requirements vary between brokerage firms, but generally, the fund must be held for 30 days to be used as collateral for margin.

Many users may have limited cash margins despite having stocks, ETFs, and mutual funds in their holdings, which can lead to missed trading opportunities. To avoid this, they can pledge their shares/ETFs as collateral margins, after a % deduction called a haircut.

This procedure is referred to as pledging. The margin obtained can be utilized for intraday equity trading, long and short futures, and writing options (equity and currency F&O). Commodity futures and options cannot be traded using collateral margins.

Yes. Flattrade allows you to pledge your mutual fund (MF) to avail margin. You can use the mutual fund units as collateral to borrow money against the value of the units for your trading requirements.

Which shares are pledged? ›

Pledging of shares is a financial arrangement in which the promoters of a company pledge their shares as collateral to secure a loan or meet their financial requirements. Pledge in the stock market means taking a loan against its securities. This arrangement is typical for companies where investors hold many shares.

The cost of pledging at Zerodha is Rs 30 + GST per pledge request. There is no cost for un-pledging. Check more on this here : What is pledging and how does it work? There is no interest levied on pledging at Zerodha, Nivas.

When using collateral margin to trade F&O, the shareholder must have 50% of the margin requirement in cash or cash equivalents. If not, interest at 0.035% per day will be charged on the cash component funded by Zerodha. See Will Zerodha provide margin on liquid funds?

The cost of pledging at Zerodha is Rs 30 + GST per pledge request, irrespective of the quantity pledged. There is no cost for un-pledging. To learn more about pledging, see What is pledging and how does it work?

Zerodha provides up to 5 times (20% margin) leverage for intraday using Margin intraday square off (MIS) and Cover Order (CO) for equity. With ₹1 lakh, stocks can be bought or sold for intraday up to ₹5 lakhs.

The collateral margin is now 100%!

If more than 50% of the available margin is utilized per overnight trade, then 1.5% interest per month will be charged on the additional overnight margin utilization. However, no interest will be charged for using 100% collateral in intraday trading.

Agricultural lands are not accepted as collateral security for education loans because of the SARFAESI ACT, of 2002. Non-agricultural lands without build-up boundaries are not accepted. A clear demarcation of land with a boundary of at least 2 feet high is required.

Collateral margin received from pledging stocks or liquid mutual funds to trade F&O will not be considered part of the withdrawable balance. Funds added during the day are available for trading immediately.

SGBs can be pledged for collateral margin at Zerodha if they are on the list of approved securities for pledging.