How to pledge mutual funds for margin on Zerodha

Tue, 12 May 2026 00:00:00 +0000

Mutual fund units held in demat form in your Zerodha demat account can be pledged as collateral to generate margin for trading in Futures and Options (F&O), equity intraday, and commodity segments on Zerodha’s Kite platform. This is a SEBI-permitted mechanism that allows investors to use their mutual fund corpus as trading margin without redeeming the units.

Prerequisites

An active Zerodha trading and demat account with complete KYC and F&O segment activated.
Mutual fund units in your Coin CDSL demat account (not SOA-folio units).
CDSL TPIN or access to CDSL-registered mobile for OTP.
Understanding that ELSS units in lock-in period cannot be pledged.
TOTP authenticator for Zerodha two-factor login.

Regulatory framework for pledging mutual funds as margin

SEBI Circular SEBI/HO/MRD/DRNP/CIR/P/2020/218 (October 2020) overhauled the margin pledge framework for brokers and clients. Key provisions:

MTF on Zerodha

Mon, 11 May 2026 00:00:00 +0000

The Margin Trading Facility (MTF) on Zerodha allows investors to buy equity shares in the cash segment using leverage, meaning the investor contributes a portion of the trade value (the margin) and borrows the remainder from Zerodha. Unlike intraday MIS positions that must be squared off by the end of the trading session, MTF positions can be held for multiple days, weeks, or months while interest accrues on the funded amount. MTF is governed by SEBI’s Margin Trading Facility Guidelines and is available on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

Margin Trading on WebNotes

How to pledge mutual funds for margin on Zerodha

Prerequisites

Regulatory framework for pledging mutual funds as margin

MTF on Zerodha