Collateral (equity) on Kite
Equity collateral on Kite is the haircut-adjusted value of equity holdings pledged for F&O margin. It appears on the Kite funds page as one component of margin available, alongside cash and liquid fund collateral.
How collateral works
When you pledge an equity holding via Margin pledge , the depository (CDSL or NSDL) marks the shares as encumbered. The broker accepts them as collateral at a discounted value (after haircut ).
| Holding | Market value | Haircut | Collateral value |
|---|---|---|---|
| 100 RELIANCE @ Rs 2,900 | Rs 2,90,000 | 12.5% | Rs 2,53,750 |
| 500 NIFTYBEES @ Rs 220 | Rs 1,10,000 | 10% | Rs 99,000 |
| 1,000 HDFC AMC @ Rs 2,500 | Rs 25,00,000 | 30% | Rs 17,50,000 |
The haircut reflects the scrip’s volatility, liquidity, and risk classification. Highly liquid large-caps have lower haircut (10-15%); midcap and smallcap scrips have larger haircut (20-50%).
Eligible scrips
Not every listed equity is accepted as collateral. Zerodha (and SEBI) publish a list of eligible scrips:
- Group A: Largecap, highly liquid, lower haircut.
- Group B: Other eligible scrips, higher haircut.
- Ineligible: Illiquid scrips, ASM / GSM listed scrips, certain SME-listed scrips.
For the current list, refer to the Zerodha haircut list .
Cash vs collateral split (SEBI 50:50)
SEBI’s framework requires:
- At least 50% of F&O initial margin in cash or cash-equivalent.
- The remaining 50% can be from equity / liquid fund collateral.
If your F&O margin is Rs 2 lakh:
- Cash component required: Rs 1 lakh.
- Collateral allowed: Rs 1 lakh.
If your cash is short (e.g., Rs 50,000), you face a cash shortfall interest charge , typically at SBI base rate + a SEBI-mandated spread.
Pledge fees
Zerodha charges a fee per pledge transaction (one-time, per scrip per pledge): around Rs 30 per pledge request (covers depository + RTA fees). Re-pledging the same scrip again incurs another fee.
The annual cost of keeping shares pledged is minimal (compared to the margin benefit), but should factor into your cost-benefit calculation.
Selling pledged shares
Pledged shares cannot be sold directly. To sell:
- Un-pledge via Console > Portfolio > Pledged shares > Unpledge.
- Confirm via depository OTP (CDSL Easiest or NSDL Speed-e).
- Shares are released; collateral value drops on Kite funds.
- Place the sell order.
The un-pledge takes about an hour during market hours.
Pledge during corporate actions
If a corporate action (bonus, split) happens while shares are pledged, the depository adjusts the pledged quantity accordingly. The collateral value updates on Kite to reflect the new haircut-adjusted figure.
Cap on collateral as a percent of margin
Per SEBI, the collateral portion of margin cannot exceed 50% of the total F&O initial margin (the inverse of the cash requirement). This is enforced at portfolio level.
See also
- Margin available / used / cash on Kite funds
- SPAN and exposure margin on Kite
- Margin required on order window
- Margin on exit calculation
- Delivery margin field on Kite
- Pay-in funds explained
- Option premium credit on Kite funds
- Collateral (liquid funds) on Kite
- Dashboard / funds calculation flow
- Positions P&L vs funds gains differences
- Intraday profits from yesterday on Kite
- How to fix missing decimal values on Kite funds
- Minimum stock SIP amount on Kite
- Margin shortfall and auto-square-off
- Margin pledge (Zerodha)
- Margin haircut
- Cash collateral shortfall interest
- P symbol on holdings page
- Kite Holdings tab explained
- Kite Positions tab explained
- Futures and options
- Bharat Bond ETF
- Sovereign gold bond
- CDSL
- NSDL
- SEBI margin framework (F&O)
- Kite (Zerodha)
- Kite web
- Kite mobile app
- Zerodha
- Zerodha Console
External references
References
- SEBI, Margin pledge framework, circular dated 25 February 2020.
- SEBI, 50:50 cash collateral requirement for F&O, sebi.gov.in.
- Zerodha Support, Equity collateral and pledge, support.zerodha.com.
- Zerodha margin policies, Haircut list for eligible scrips, zerodha.com.