How to unpledge holdings on Zerodha

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Unpledging holdings on Zerodha releases the lien created over your equity shares or ETFs at CDSL, converts the securities back to free delivery holdings, and withdraws the corresponding collateral margin from your trading account. The procedure is the reverse of the pledge process and is generally completed without requiring a separate CDSL TPIN OTP, since the instruction is from the client to the broker (a release instruction, rather than a creation instruction).

For context on the pledge mechanism itself, see How to pledge holdings for margin on Zerodha, Pledge and collateral margin on Zerodha, and Margin pledge mechanics on Zerodha.

Step-by-step procedure

Ensure no open margin positions depend on the collateral

Before initiating an unpledge, navigate to Funds in Kite and review the margin utilisation. If the Collateral (equity) margin from the securities you intend to unpledge is currently being used to maintain an open F&O or MIS position, unpledging will immediately reduce your available margin. A margin shortfall on an open position can trigger an automatic square-off by Zerodha’s risk management system, typically at the client’s expense.

To avoid this, either:

  • Close the relevant open positions before unpledging; or
  • Transfer sufficient cash into your trading account (via Funds → Add funds or an instant UPI transfer) to replace the collateral margin that will be removed.

Sign in to Kite and open Holdings

Log in to kite.zerodha.com with your client ID, password, and TOTP. In the left navigation, click Holdings. The Holdings view shows all securities in your demat account. Securities currently pledged display a lock icon and are labelled Pledged in a distinct colour. Hover over a pledged row to see the pledged quantity, free quantity, and the name of the pledgee (Zerodha’s clearing member account).

If a security shows MTF pledged rather than a standard pledge label, it was auto-pledged when you purchased it on Margin Trading Facility. Use the MTF repayment flow to release MTF pledges, not this unpledge procedure.

Select the securities to unpledge

Tick the checkbox beside each security you want to unpledge. Multiple securities can be selected in a single unpledge request. Click the Unpledge button that becomes active at the top of the Holdings list once at least one pledged security is selected.

Enter the quantity to unpledge

The unpledge form opens with a row for each selected security, showing the total pledged quantity. In the Quantity field, type the number of shares or units to release. You can enter a quantity smaller than the total pledged quantity; the unreleased portion remains pledged and continues to provide collateral margin.

The form also shows an estimate of the collateral margin that will be withdrawn when the specified quantity is unpledged, so you can confirm the quantity required to bring your collateral to the desired level.

Submit the unpledge request

Click Unpledge to confirm. Zerodha sends an unpledge (release of pledge) instruction to CDSL. Unlike the pledge creation flow, which requires the client to separately authorise on CDSL’s portal using a TPIN and OTP, the unpledge instruction is processed in CDSL’s back-end upon broker instruction. You do not receive a separate CDSL SMS for an unpledge.

Zerodha displays a confirmation message when the unpledge instruction is dispatched successfully.

Verify that collateral margin has been withdrawn

Navigate to Funds in Kite and review the margin breakdown. The Collateral (equity) line should reflect the reduction corresponding to the securities you unpledged. The unpledged securities in the Holdings view will show as free holdings without a lock icon.

If you partially unpledged, the remaining pledged quantity continues to show the lock icon and the Pledged label, and the corresponding collateral margin remains available for margin trading.

What can go wrong

  • Margin shortfall triggered immediately after unpledge. If you had open positions backed by the collateral and the unpledge proceeds, Zerodha’s RMS (Risk Management System) may auto-square off positions within minutes. Always close positions or add cash before unpledging.
  • Unpledge appears to submit but collateral does not reduce. If CDSL processing is delayed due to end-of-day settlement cycles, the collateral reduction may appear on the next morning’s margin statement rather than the same day. Wait until the next business day before raising a support ticket.
  • Cannot select the pledged security for unpledge. This occurs when a pledge invocation is in progress (i.e., Zerodha’s clearing member has invoked the pledge to settle a margin call). After invocation, the securities are transferred to the clearing corporation and can no longer be released through a client-initiated unpledge. Contact Zerodha support if you suspect an erroneous invocation.
  • Unpledge rejected by CDSL. Rare but can occur if there is a system issue at CDSL. Retry after 30 minutes or contact Zerodha’s support.
  • Securities remain in pledged state after unpledge confirmation. Allow one business day for the CDSL record to propagate. If the lock icon persists after T+1, contact Zerodha support with the unpledge confirmation number.

References

  1. SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/171, Margin obligations to be met by way of pledge / re-pledge in the Depository System, 9 September 2020.
  2. How to unpledge securities and release collateral margin, Zerodha Support Portal, https://support.zerodha.com/category/trading-and-markets/margin-leverage/margin-leverage/articles/unpledging-holdings.
  3. CDSL, Pledge and Unpledge operational instructions, https://www.cdslindia.com/Publications/operationsinstruction.aspx.

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.

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