Zerodha MTF FAQs

MTF FAQs

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Frequently asked questions about Margin Trading Facility (MTF) for Indian retail investors.

What is MTF

MTF (Margin Trading Facility) is a broker-extended credit facility for equity delivery purchases. The user pays a portion of the purchase (typically 25-50%); the broker funds the rest. Interest accrues on the borrowed portion. Shares are pledged as collateral.

Who’s eligible

Per SEBI’s 2026 framework :

  • Annual income demonstrated (typically Rs 10 lakh+).
  • Net worth requirement (Rs 25 lakh+).
  • Suitability assessment passed.
  • Acknowledged risk disclosure.

What stocks are MTF-eligible

Stocks on the broker’s MTF-approved list:

What’s the interest rate

Interest is typically MCLR / repo-linked + spread:

  • 10-14% per annum range (broker-dependent).
  • Charged daily.
  • See Zerodha MTF interest for Zerodha specifics.

Can I carry MTF positions overnight

Yes. MTF is specifically designed for carry-positions (not intraday).

When does MTF auto-square-off

If margin shortfall / MTM erodes collateral:

  • Margin call notice.
  • 48-hour top-up window.
  • If not addressed, broker squares off.

Can I convert MTF to delivery

Yes; pay the borrowed portion and the position becomes regular CNC. See Convert MTF holdings to delivery .

Can I sell MTF stocks

Yes; the sale proceeds repay the MTF loan first, then any excess credits to your account.

What’s the tax treatment

MTF P&L: capital gains (equity rules):

  • STCG / LTCG per holding period.
  • Interest paid on MTF: may be deductible against gains (CA advice needed).

For complex tax situations involving MTF interest deductibility, consult a Chartered Accountant before filing.

Does Zerodha offer MTF

Zerodha’s MTF offering has been limited compared to full-service brokers. See Zerodha MTF for current status. Many traders use ICICI Direct, HDFC Securities, Angel One for MTF.

What’s the difference from intraday MIS

AspectMTFIntraday MIS
Carry overnightYesNo
InterestYesNo
SettlementT+1 (with pledge)Same day intraday
SquareoffManual / auto on shortfallAuto end of day

See also

External references

References

  1. SEBI, MTF framework and 2026 updates, sebi.gov.in.
  2. Zerodha, MTF policy, zerodha.com.

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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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