How-to Pledge Bonds

Pledge covered bonds on Zerodha

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Step-by-step procedure

Five steps per the procedure infobox.

Eligible bonds

  • G-Sec / SDL / T-Bill: Yes, low haircut (~5-10%).
  • Sovereign Gold Bond: Yes.
  • Tax-free bonds (AAA): Yes.
  • Corporate bonds (AAA): Yes.
  • Lower-rated: Higher haircut or not eligible.

Haircut

Margin = Bond value x (1 - haircut). E.g., G-Sec with 10% haircut: Rs 10,000 bond gives Rs 9,000 margin.

Use cases

  • Trading equity intraday using bond margin.
  • F&O margin requirement.
  • Avoiding liquidation of long-term bond holdings.

See also

External references

References

  1. SEBI, Margin pledge framework, sebi.gov.in.
  2. Zerodha, Pledge procedure, support.zerodha.com.

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