MTF on WebNotes

Brokerage and MTF costs

Wed, 20 May 2026 00:00:00 +0000

The total cost of an MTF position includes brokerage (typically Rs 0 on delivery for Zerodha), interest on the borrowed portion (10-14% per annum), and various charges (STT, exchange, GST, stamp, SEBI). See MTF charges on Zerodha for the full breakdown.

Quick example

For a Rs 5 lakh MTF position held for 90 days (50% borrowed = Rs 2.5 lakh):

Cost	Amount
Brokerage on buy	Rs 0
Interest on Rs 2.5 lakh at 12% for 90 days	Rs 7,397
STT on sell (if at Rs 5 lakh proceeds)	Rs 125
Other (exchange, GST, stamp, SEBI)	~Rs 50-100
Total	~Rs 7,572

For 90 days, MTF cost ~1.5% of position value.

How MTF stocks are sold

Wed, 20 May 2026 00:00:00 +0000

When you sell MTF-bought stocks, the sale proceeds settle in a specific order:

Loan portion (broker-funded amount) repaid first.
Accrued interest deducted.
Brokerage and charges deducted.
Excess credits to your trading account.

Example

You bought Rs 5 lakh of XYZ via MTF (50% MTF = Rs 2.5 lakh borrowed). You hold for 60 days (interest Rs 4,930 at 12% p.a.). XYZ rises to Rs 5.5 lakh; you sell.

Sale proceeds: Rs 5,50,000.
Repay MTF loan: Rs 2,50,000.
Pay accrued interest: Rs 4,930.
Other charges (STT, etc.): ~Rs 200.
Your net credit: Rs 2,94,870.

Of which, your original Rs 2.5 lakh contribution + Rs 44,870 gain.

Lower MTF interest rate negotiation

Wed, 20 May 2026 00:00:00 +0000

MTF interest rates are set by the broker, typically MCLR / repo-linked + spread. The scope for negotiation by retail clients is limited; brokers generally apply standardised rates.

What affects the rate

Base rate: Linked to broker’s cost of capital (typically SBI MCLR or RBI repo + spread).
Spread: Broker’s margin (typically 4-7%).
Client tier: High-volume / HNI clients may get small reductions.
Market conditions: Rates may adjust with regulatory changes.

Negotiation scope

For retail clients:

MTF charges on Zerodha

Wed, 20 May 2026 00:00:00 +0000

MTF charges on Zerodha (or any broker) consist of several components: interest on the borrowed portion, brokerage on the equity transaction, pledge fees, and various government / exchange charges. This article breaks down the cost structure.

Cost components

Component	Detail
Interest on borrowed amount	Daily; typically 10-14% per annum
Brokerage on the buy	Zerodha: Rs 0 for delivery (MTF treated as delivery for STT)
STT	0.025% on sell
Exchange transaction charge	Standard
GST	18% on brokerage + exchange charge
Stamp duty	Per state framework
SEBI fee	Standard
Pledge fee	Rs 30 per pledge instruction
Other regulatory charges	As applicable

Interest calculation

For a Rs 5 lakh MTF position with 12% annual interest:

MTF eligible stocks on Zerodha

Wed, 20 May 2026 00:00:00 +0000

Stocks eligible for MTF on Zerodha (or any broker offering MTF) are determined by:

SEBI’s approved framework for MTF.
Exchange-published list of MTF-eligible scrips.
Broker’s internal approved list (may be narrower than the exchange’s).

Typical eligibility criteria

Criterion	Detail
Listing	Listed on NSE / BSE
Market cap	Generally large-cap and select mid-cap
Liquidity	Sufficient trading volume
Not under surveillance	Not on ASM / GSM Stage 2+
Not in T2T segment	Standard rolling settlement
F&O availability	Often (not mandatory)

Excluded categories

Excluded	Reason
ASM / GSM Stage 2+ scrips	Surveilled; not eligible
Trade-to-Trade segment	T2T mechanics conflict
Penny stocks	High risk
SME segment	Less liquid; restricted
Recently listed (less than 90 days)	Liquidity uncertainty
Periodic Call Auction stocks	Special trading rules

How to verify

To check if a specific stock is MTF-eligible on Zerodha:

MTF FAQs

Wed, 20 May 2026 00:00:00 +0000

Frequently asked questions about Margin Trading Facility (MTF) for Indian retail investors.

What is MTF

MTF (Margin Trading Facility) is a broker-extended credit facility for equity delivery purchases. The user pays a portion of the purchase (typically 25-50%); the broker funds the rest. Interest accrues on the borrowed portion. Shares are pledged as collateral.

Who’s eligible

Per SEBI’s 2026 framework :

Annual income demonstrated (typically Rs 10 lakh+).
Net worth requirement (Rs 25 lakh+).
Suitability assessment passed.
Acknowledged risk disclosure.

What stocks are MTF-eligible

Stocks on the broker’s MTF-approved list:

MTF ledger entries

Wed, 20 May 2026 00:00:00 +0000

MTF ledger entries in Zerodha Console show the financial movements of MTF positions, including buy, daily interest accrual, sell, and interest payments. Understanding the entries helps with reconciliation and tax computation.

Typical entries

For an MTF buy:

“MTF buy: [Scrip] [Quantity] @ [Price]” - the trade execution.
“MTF margin: [Amount]” - the user’s contribution.
“MTF loan: [Amount]” - the broker-funded portion.

For daily interest:

“Interest charged on MTF: [Amount]” - daily debit.

For an MTF sell:

MTF vs e-margin difference

Wed, 20 May 2026 00:00:00 +0000

MTF (Margin Trading Facility) is the SEBI-regulated framework for broker-extended credit on equity delivery. e-margin is a historical / alternative leverage product offered by some brokers; SEBI’s framework has largely standardised these under MTF.

Comparison

Aspect	MTF	e-margin
Regulator	SEBI	Pre-SEBI MTF framework
Settlement	T+1 with pledge	T+1 with pledge
Interest	10-14% per annum	Was similar
Eligible stocks	SEBI-approved list	Broker-defined
Current relevance	Active	Largely subsumed into MTF

Post the SEBI MTF framework formalisation, e-margin has been folded into MTF at most brokers.

Nudge for selling holdings with open MTF positions

Wed, 20 May 2026 00:00:00 +0000

Kite shows a nudge warning when you try to sell a holding that’s pledged for an MTF position. The nudge alerts you to the consequence: selling the pledged holding requires un-pledging first, and the MTF position’s collateral position changes.

What the nudge says

Typical nudge:

“This holding is pledged for an MTF position. Selling will affect your MTF margin coverage.”
Suggests un-pledging first, or considering the impact on MTF margin.

Why it matters

If you sell pledged collateral without addressing the MTF position:

RMS policy for MTF square-off

Wed, 20 May 2026 00:00:00 +0000

The Risk Management System (RMS) policy for MTF square-off on Zerodha (and any broker offering MTF) follows a defined sequence: margin call notice, top-up window, then forced liquidation if not addressed.

Trigger: MTM erosion

MTF square-off is triggered when:

Position MTM loss erodes the maintenance margin.
Pledged collateral value (for the MTF position) falls below requirement.
User fails to pay accrued interest.

The exact trigger threshold varies; typically when total margin used > 90% of margin available.

How to convert a CNC position to MTF on Zerodha

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

On Zerodha , an existing CNC (delivery) holding can be converted to an MTF position through a conversion feature in the Kite Holdings view. The conversion is effectively a broker-funded buyback of the delivery position: Zerodha credits the funded amount (up to 75% of the current market value) to your trading account, while the shares move into an MTF-pledged state. This releases liquidity from an existing holding without requiring a sale, allowing the investor to use the freed cash for other purposes while retaining exposure to the stock.

How to repay MTF interest and close an MTF position on Zerodha

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

Repaying an MTF position on Zerodha involves settling the outstanding funded amount (principal) and any accrued interest, which releases the pledged shares from the MTF lien and converts them back to free CNC delivery holdings. Repayment can be done by cash transfer (keeping the shares) or by selling the MTF shares (using sale proceeds to settle the loan). Understanding both paths, and the timing of daily interest debits, is important for optimising the total cost of MTF positions.

How to take an MTF position on Zerodha

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

The Margin Trading Facility on Zerodha allows investors to purchase eligible equity shares at a fraction of the total purchase price, with the balance funded by Zerodha as a short-term loan. The purchased shares serve as collateral for the loan and are held in the investor’s CDSL demat account in a pledged state. Interest accrues daily on the funded (borrowed) amount. MTF is a delivery product; shares are credited to the demat account after T+1 settlement and can be held for extended periods, subject to margin maintenance requirements.