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

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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.

For background on how MTF works and the interest structure, see MTF on Zerodha and MTF interest and brokerage at Zerodha. For opening an MTF position, see How to take an MTF position on Zerodha.

Understanding MTF interest accrual and debiting

Interest on the funded amount accrues daily at approximately 0.04% per day (14.6% per annum as of mid-2026). This is a simple daily rate applied to the outstanding principal:

  • Accrual: Interest accrues every calendar day, including weekends and market holidays, from T+1 (the day shares settle in the demat after the MTF purchase or conversion).
  • Debiting: Zerodha debits accrued interest to your trading account ledger periodically, typically monthly or when the MTF position is closed. Confirm the exact debiting schedule in the Zerodha MTF product documentation or support portal.
  • Outstanding balance: The outstanding MTF loan balance is the funded amount at initiation plus any unpaid accrued interest. The repayment required to fully close the position equals this outstanding balance.

To minimise total interest cost, close or repay the MTF position as soon as the investment thesis is realised. Long-duration MTF positions (held for months) accumulate interest that can significantly erode returns.

Step-by-step procedure

Check the outstanding MTF balance

Log in to Console at console.zerodha.com. Navigate to Portfolio then Holdings or Reports then Ledger. The Holdings view shows each MTF position with its current market value and the outstanding loan amount. The Ledger view shows the running balance, including interest debits already applied.

Alternatively, in Kite, navigate to Holdings, hover over the MTF-pledged holding, and look for the funded amount shown in the holding details.

Make a note of:

  • The outstanding principal (funded amount).
  • Accrued interest not yet debited (estimated from the daily rate multiplied by the number of days held since the last interest debit).
  • Total repayment required = principal + accrued interest.

Add sufficient funds for cash repayment

If you intend to repay in cash (keeping the shares), transfer funds to your trading account from your linked bank account. In Kite, go to Funds then Add funds. Supported methods include:

  • UPI: Instant, for amounts up to the UPI limit set by your bank (typically Rs 1 lakh to Rs 5 lakh per transaction). UPI is the fastest method for intraday repayment.
  • Net banking: Also instant, suitable for larger amounts.
  • NEFT/RTGS: Takes 15 minutes to 2 hours depending on the bank; use for large repayments when time permits.

Ensure the transferred amount is slightly more than the estimated total repayment to account for any additional interest accrued during the transfer processing time.

Initiate repayment from Kite Funds

In Kite, navigate to Funds (top-right corner). Look for the Repay MTF option or the MTF section in the Funds breakdown. The repayment interface shows:

  • The outstanding MTF balance per position or as a combined total.
  • A field to enter the repayment amount.

If you have multiple MTF positions in different securities, the interface may allow you to select which position to repay, or it may apply the repayment to the oldest (highest-interest) position first by default. Confirm the allocation logic with Zerodha support if you have multiple open MTF positions and want to control which one is repaid first.

Select full or partial repayment

Full repayment: Enter the full outstanding balance (principal plus all accrued interest). Full repayment closes the MTF position entirely. The shares are de-pledged from the MTF lien and revert to free CNC delivery holdings in your demat account. The MTF lock icon disappears from the Holdings view after processing.

Partial repayment: Enter an amount less than the full outstanding balance. Partial repayment reduces the outstanding principal on which future interest accrues. The MTF pledge on the shares remains in place; the shares do not become free delivery holdings. Use partial repayment when you want to reduce the daily interest cost progressively without closing the position.

Confirm repayment and verify Holdings

Click Confirm or Repay to submit the repayment instruction. Zerodha processes the repayment:

  • For full repayment: the MTF lien is released. The shares in Holdings change from MTF-pledged to free CNC holdings. The lock icon disappears.
  • For partial repayment: the outstanding balance in the Console ledger reduces. The Holdings still shows MTF-pledged.

Processing typically occurs on the same business day if the repayment is submitted before market close. Repayments submitted after market hours are processed the next business morning.

Repayment by selling MTF shares

If you want to exit the MTF position by selling the shares (rather than repaying in cash and holding the shares free):

  1. Navigate to Holdings in Kite.
  2. Find the MTF-pledged holding and click Sell.
  3. Place a sell order with the desired quantity, price, and order type (CNC product type for delivery sell).
  4. On execution and T+1 settlement, the sale proceeds are credited to your trading account.
  5. Zerodha automatically applies the proceeds to the outstanding MTF loan balance. Any surplus after full loan repayment remains as free cash in your trading account.
  6. If sale proceeds are less than the outstanding MTF balance (because the stock price declined), the shortfall remains as a debit balance in your trading account. You must settle this debit balance by transferring funds.

Selling the MTF holding triggers Securities Transaction Tax (STT) at 0.1% on the delivery sell turnover and all other applicable statutory charges.

What can go wrong

  • Repayment amount accepted but shares still show as pledged. Allow one business day for the CDSL de-pledge instruction to settle. The lock icon in Holdings may persist until the next morning even if the repayment is processed on the same day.
  • Interest continues to accrue after repayment submission. Interest stops only when the repayment is processed and the funded amount is settled, not when the repayment is initiated. If there is a processing delay (for example, weekend), additional interest may accrue.
  • Insufficient funds message when repaying. The accrued interest since the last ledger debit may have increased the total outstanding amount beyond the transferred funds. Transfer a slightly larger amount to cover the buffer.
  • Forced liquidation before repayment. If the stock price falls sharply and the collateral value breaches the maintenance margin threshold, Zerodha may square off the MTF position without waiting for your repayment instruction. The shortfall (if any) after liquidation is charged to your trading account.
  • Sale proceeds insufficient to cover full MTF balance. This occurs when the stock price at sale is lower than the MTF purchase price, and the outstanding loan principal exceeds the sale proceeds. The residual debit must be settled in cash.

References

  1. SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/33, Review of the guidelines on Margin Trading Facility, 19 March 2019.
  2. How to repay MTF and close the position, Zerodha Support Portal, https://support.zerodha.com/category/trading-and-markets/margin-leverage/mtf/.
  3. Zerodha MTF interest rates and charges, https://zerodha.com/charges/.
  4. SEBI Master Circular for Stock Brokers, Chapter on Margin Trading Facility, SEBI/HO/MIRSD/2024.

Conflict-of-interest disclosure: WebNotes Editorial Team has no financial relationship with Zerodha or any broker. This guide is produced for informational purposes only and does not constitute investment or financial advice. MTF involves significant leverage risk; consult a SEBI-registered investment adviser before using leveraged products.

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The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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