Zerodha Penalty Calculation

How margin penalty is calculated

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Margin shortfall penalty in India is calculated per SEBI’s framework as a percentage of the shortfall, charged daily for each day the shortfall persists.

Rate table

Shortfall criteriaPenalty rate
Less than Rs 1 lakh AND less than 10% of margin0.5% per day
Equal to or above Rs 1 lakh OR 10% to 25% of margin1% per day
Above 25% of margin5% per day (escalates)

Worked examples

Example 1: small shortfall

  • Margin required: Rs 5 lakh.
  • Margin held: Rs 4.7 lakh.
  • Shortfall: Rs 30K (6% of margin; less than Rs 1 lakh).
  • Penalty: 0.5% per day = Rs 150 per day.
  • Over 5 days: Rs 750.

Example 2: medium shortfall

  • Margin required: Rs 10 lakh.
  • Margin held: Rs 7.5 lakh.
  • Shortfall: Rs 2.5 lakh (25% of margin).
  • Penalty: 1% per day = Rs 2,500 per day.
  • Over 5 days: Rs 12,500.

Example 3: large shortfall

  • Margin required: Rs 10 lakh.
  • Margin held: Rs 6.5 lakh.
  • Shortfall: Rs 3.5 lakh (35% of margin).
  • Penalty: 5% per day = Rs 17,500 per day.
  • Over 3 days: Rs 52,500.

Large shortfalls compound rapidly.

When the penalty applies

  • Daily on each trading day of shortfall.
  • Reset / recalculated each day based on current shortfall.
  • Charges continue until shortfall is fully resolved.

How to avoid

  1. Add funds immediately on shortfall notice.
  2. Close positions to reduce margin used.
  3. Monitor margin during high-volatility days.
  4. Maintain buffer (50%+ above minimum) for safety.

See also

External references

References

  1. SEBI, Margin shortfall penalty framework, sebi.gov.in.
  2. NSE Clearing, Penalty rate computation, nseclearing.com.
  3. Zerodha, Margin penalty policy, zerodha.com.

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