How to enable instant Liquidcase pay-ins on Zerodha
Zerodha Liquidcase is a liquid mutual fund product available through Zerodha Coin that can be pledged directly to Zerodha as collateral margin, enabling near-instant margin pay-ins without selling the fund units. Unlike a conventional fund addition where money leaves the bank account and enters the trading account, a Liquidcase pay-in pledges the liquid fund units held in your demat account to Zerodha. The margin equivalent, the Net Asset Value (NAV) of the units minus a regulatory haircut, is then credited to your available margin. This allows the fund to continue earning the overnight return while simultaneously providing trading margin. This guide explains the complete process: from purchasing Liquidcase units to pledging them for margin, the applicable fees, the CDSL pledge authentication, and the unpledge process.
Conflict-of-interest disclosure. WebNotes Editorial Team publishes this guide for informational purposes. WebNotes has no commercial relationship with Zerodha, Zerodha AMC, or CDSL. No commission is earned from fund investments or pledge actions.
Prerequisites
Before following this guide, confirm that:
- You hold an active Zerodha trading and demat account. A demat account is required to hold liquid fund units in dematerialised form and to pledge them.
- You have funds available in your trading account or bank account to invest in the Liquidcase liquid fund via Zerodha Coin.
- Your demat account with CDSL (Central Depository Services Limited) or NSDL (National Securities Depository Limited) is in good standing. The pledge instruction requires depository-level authentication.
- You have your registered mobile number accessible for the CDSL/NSDL OTP authentication.
- You understand the basic mechanics of pledging: pledged units remain in your demat account and are legally yours, but they are encumbered, they cannot be sold or transferred while the pledge is active.
Understanding Liquidcase and the pledge mechanism
What Liquidcase is
Zerodha Liquidcase is a liquid mutual fund scheme offered by Zerodha AMC (or distributed via Zerodha Coin from a partner AMC, depending on the current product configuration). Liquid funds invest in money-market instruments (treasury bills, commercial paper, certificates of deposit) with maturities up to 91 days. Their NAV changes daily, reflecting accrued interest. The fund is not guaranteed but historically maintains a stable NAV with low volatility.
How the pledge-for-margin flow works
| Step | What happens |
|---|---|
| Purchase | You buy liquid fund units via Coin. Units are credited to your demat account on T+1. |
| Pledge | You instruct CDSL/NSDL to create a pledge in favour of Zerodha. The depository marks the units as pledged. |
| Margin credit | Zerodha credits the pledged margin (NAV × units × (1 - haircut)) to your trading account. |
| Trading | You trade using this margin. The units remain in your demat account and continue earning daily returns. |
| Unpledge | When you no longer need the margin, you request an unpledge. The margin is debited from your account and the units are released. |
| Redemption | After unpledging, you can redeem the units via Coin and receive cash in 1 business day (liquid fund T+1 redemption). |
SEBI haircut on liquid fund units
SEBI prescribes haircut percentages for collateral accepted by brokers. For liquid mutual fund units, the standard haircut is 10%, meaning 90% of the NAV of pledged units is available as margin. For example, if you pledge units worth Rs 1,00,000 (at current NAV), Rs 90,000 is credited as collateral margin.
Step-by-step procedure
Step 1: Invest in the Liquidcase fund via Zerodha Coin
Open coin.zerodha.com in a browser. Log in with your Zerodha credentials. Search for Zerodha Liquidcase or the eligible liquid fund product. Click Invest or Lump sum and enter the investment amount. Select a one-time (lump sum) investment rather than an SIP, as SIP units take time to accumulate before pledging.
The investment is funded from your Kite trading account balance (if sufficient) or via a fresh payment from your bank. Confirm the transaction. You receive a confirmation email from Coin.
Step 2: Wait for units to appear in the demat account
Log in to console.zerodha.com and navigate to Portfolio > Holdings on the next business day after your investment. The Liquidcase fund units should appear here. If they are not visible after 2 business days, contact Zerodha support with your Coin transaction reference.
Step 3: Navigate to the Margin Pledge section
On Console, go to Portfolio > Holdings or navigate to the Margin section and look for Pledge or Pledge for margin. Alternatively, some clients access the pledge flow directly from the Holdings page by selecting the fund and clicking the Pledge option.
Step 4: Select Liquidcase units to pledge
On the pledge screen, find the Liquidcase fund in the list of holdings eligible for pledge. Enter the number of units you wish to pledge. The screen shows:
| Column | Description |
|---|---|
| Fund name | Liquidcase or the liquid fund name |
| Units held | Total units in your demat account |
| Current NAV | Latest NAV per unit |
| Value | Total value of units (units × NAV) |
| Haircut | Percentage applied by SEBI (typically 10%) |
| Eligible margin | Value × (1 - haircut) |
Enter the number of units to pledge. The system calculates the eligible margin and displays it on screen.
Step 5: Initiate the pledge and complete CDSL authentication
Click Pledge or Create pledge. A CDSL TPIN authentication window opens (for CDSL-held demat accounts). Enter:
- Your CDSL TPIN (the 6-digit Personal Identification Number for your demat account, separate from your Zerodha login password).
- The OTP sent to your CDSL-registered mobile number or email.
For NSDL-held accounts, the authentication flow uses the NSDL e-DIS (Electronic Delivery Instruction Slip) or NSDL TPIN. The process is analogous.
If you have not set a CDSL TPIN, visit cdsl.com and register for the TPIN service, or use the CDSL Easiest portal.
Step 6: Confirm margin credit
After successful authentication, the pledge is created. Zerodha’s back-office processes the pledge and credits the eligible margin to your trading account. This typically happens:
- On the same business day if the pledge is submitted before approximately 3:30 PM IST.
- On the next business day if submitted after the cut-off.
Log in to kite.zerodha.com and check Funds (or the margin section). The collateral margin from the Liquidcase pledge appears under Collateral (liquid funds) or a similar label in the funds breakdown.
Step 7: Use the margin for trading
The pledged collateral margin is now available for trading. It can be used for:
- Equity intraday trades (MIS orders)
- F&O positions (subject to SEBI’s cash-component rules)
- Overnight equity delivery trades (subject to broker-specific rules)
The Liquidcase units remain in your demat account throughout. Each day, the NAV of the units increases slightly as the fund accrues interest. This means your collateral margin value increases marginally each day without any additional action from you.
Unpledging Liquidcase units
When you no longer need the collateral margin:
- Log in to Console and navigate to Portfolio > Holdings or the Margin > Pledge section.
- Find the pledged Liquidcase units and click Unpledge or Release pledge.
- Complete the CDSL TPIN and OTP authentication.
- The margin is removed from your trading account and the units are released from the pledge.
- If you wish to redeem the units for cash, go to Coin and click Redeem. Liquid fund redemptions settle on T+1; the proceeds are credited to your Zerodha trading account.
Fees and costs
| Fee item | Amount |
|---|---|
| Pledge creation fee (CDSL/NSDL) | Typically Rs 30 per pledge instruction (charged by CDSL/NSDL) |
| Unpledge fee | Typically nil or Rs 30 per instruction, depending on depository |
| Fund expense ratio | Liquid funds typically have a Total Expense Ratio (TER) of 0.10%–0.20% per annum; deducted automatically from the NAV |
| Fund entry/exit load | Liquid funds have a small exit load for redemptions within 7 days (graded); nil from day 8 onwards |
There is no brokerage on the pledge or unpledge action itself. Zerodha’s payment gateway fees do not apply to pledge-based pay-ins.
What can go wrong
Units not visible in Holdings after T+1. If the fund units do not appear in Console Holdings after 2 business days, check the Coin transaction history to confirm the investment was successful. If the investment shows as Processed on Coin but the units are not in Holdings, contact Zerodha support.
CDSL TPIN authentication fails. Ensure you are entering the CDSL TPIN (a separate 6-digit PIN from your Zerodha login password). If you have forgotten the CDSL TPIN, reset it at cdsl.com or through the CDSL Easiest portal. This may take 1–2 business days.
Margin not credited on same day. If the pledge was submitted after the Zerodha back-office cut-off (typically 3:30 PM IST), the margin credit appears the next business day. If it does not appear by 10:00 AM on the next business day, contact Zerodha support.
Margin shortfall with pledged units. If your F&O or equity positions incur an MTM loss that results in a margin shortfall, and the shortfall exceeds the collateral margin from Liquidcase, Zerodha’s risk management system may reduce open positions (auto-square off). Monitor the available margin in Kite during market hours.
Cannot unpledge due to open positions. If you have open positions that are dependent on the collateral margin, unpledging the units causes a margin shortfall. You must either close sufficient positions to free up the required margin or add additional cash margin before unpledging.
Related guides
- How to add funds to Zerodha via UPI
- How to add funds to Zerodha via NEFT, RTGS, or IMPS
- How to read your funds statement on Console
- How to set up a UPI eMandate on Zerodha
- How to withdraw funds from Zerodha
References
- SEBI, “Circular on pledge of securities for margin purposes,” SEBI/HO/MRD/DRMNP, 2020 and 2021.
- SEBI, “Framework for Liquid Fund units as collateral margin,” SEBI circular, August 2019.
- CDSL, “TPIN (Transaction PIN) for demat account pledge authorisation,” cdsl.com.
- NPCI, “UPI ASBA and collateral management,” npci.org.in; see also UPI ASBA.
- Zerodha Support, “Pledging liquid fund units for margin on Zerodha,” support.zerodha.com.
- Zerodha Z-Connect Blog, “Liquidcase, how to use liquid funds as trading margin,” zerodha.com/z-connect.
- AMFI, “Liquid fund category definition and regulation,” amfiindia.com.