Zerodha pledge eligibility approved securities collateral margin zerodha pledge F&O margin mutual fund pledge

Securities eligible for pledging on Zerodha

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Overview

Pledge eligibility on Zerodha is decided by the Clearing Corporation, not by the broker: only securities on the approved list published at zerodha.com/approved-securities can be pledged for collateral margin, and the list spans approved stocks, ETFs, mutual funds, government securities, treasury bills and Sovereign Gold Bonds. Pledging lets a Zerodha client use holdings as collateral for futures and options without selling them, but the holding has to clear a specific eligibility test before Kite will accept it.

That test has two layers. First, the instrument type must be one the Clearing Corporation accepts as collateral. Bank fixed deposits, for example, are never accepted, however safe they are. Second, the specific security must sit on the current approved list, which the Clearing Corporation revises and Zerodha republishes. A blue-chip stock that qualified last quarter can be dropped if its risk profile changes, and a mutual fund’s regular plan can be accepted while the direct plan of the very same scheme is not. This article sets out what qualifies, why the approved list is the single source of truth, and how to check a holding before you pledge it. For the mechanics of the pledge itself, see margin pledge mechanics on Zerodha and how to pledge holdings for margin .

What can be pledged

Zerodha accepts six broad categories of instruments, provided the specific security is on the approved list.

Approved equity shares are the most common collateral. These are liquid, exchange-traded stocks, largely overlapping the securities the Clearing Corporation deems acceptable for margin. Exchange-traded funds sit alongside them, including index ETFs and cash-equivalent ETFs such as Liquid BeES. Mutual fund units, both equity and debt schemes, can be pledged where the scheme is approved and held in whole units. Government securities and treasury bills are accepted once they are credited to the demat account. Sovereign Gold Bonds are accepted once they are credited and listed. Zerodha’s own Nifty LargeMidcap 250 Index Fund and its LIQUIDCASE ETF are on the approved list and can be pledged.

The collateral margin you receive is never the full market value. Each approved security carries a haircut, a risk buffer that reduces the credited margin without touching the value of your holding. A stock worth Rs 1,00,000 with a 10% haircut yields Rs 90,000 of collateral, and the shares are still worth Rs 1,00,000. The per-security haircut is published next to each name on the approved-securities list. The full mechanics are covered in Zerodha pledge haircut explained .

Collateral margin from pledged securities can be used for equity intraday, trading futures, and writing or shorting options. It cannot be used to buy stocks or ETFs for delivery. Buying options funded by collateral is a special case that attracts a delayed-payment charge on the amount used.

The approved-securities list

The approved list is the controlling document for eligibility. It is set by the Clearing Corporation, the body that holds the re-pledged securities as margin against F&O positions, and Zerodha publishes the current version at zerodha.com/approved-securities. Each entry shows the security, its haircut, and the resulting collateral value. Because the Clearing Corporation revises the list, a security’s presence and its haircut both change over time, so the live page is the only reliable reference. Do not assume a fixed haircut for a named stock or fund from memory.

Within the equity list, Zerodha maintains a subset of roughly 800 approved securities that give interest-free collateral margin. You can pledge additional Group A stocks that sit outside this interest-free subset, but Zerodha charges 0.05% per day on the collateral you actually use from those stocks. This is separate from the pledge charge and from the 50:50 cash-shortfall interest, so it is worth checking whether a stock is inside or outside the interest-free list before pledging it purely for margin. The pledge charges page sets out the three distinct interest and fee lines that can arise.

When Zerodha re-pledges your securities, it does so to NSE Clearing for NSE positions and the Indian Clearing Corporation for BSE positions. The shares themselves stay in your own demat account under the post-2020 SEBI margin-pledge system ; only the lien moves.

Cash-equivalent versus non-cash collateral

For eligibility purposes, approved securities split into two groups that behave very differently against the 50% cash rule.

SEBI requires that at least half the margin for an overnight F&O position be met in cash or cash equivalents. Cash-equivalent securities count toward that half. Liquid funds, overnight funds, Liquid BeES, government securities and treasury bills are treated as cash equivalent, so pledging them helps satisfy the cash leg, and their collateral is usable in full. Ordinary equity shares are non-cash collateral; the margin they generate can meet only the other 50%. This is why active F&O traders often pledge a mix, using Liquid BeES or liquid funds for the cash leg and stocks for the rest. The split is explained in the 50:50 cash-collateral rule and cash component versus collateral component .

Zerodha’s own LIQUIDCASE ETF is a cash-equivalent instrument on the approved list, covered in LIQUIDCASE as collateral on Zerodha . One practical limit to note: cash-equivalent instruments and mutual funds cannot be instant-sold while pledged; they have to be unpledged first, whereas an ordinary pledged stock can be sold directly.

Mutual funds: regular versus direct plans

Mutual funds can be pledged, but with two constraints that catch investors out.

The first is the plan type. The Clearing Corporation sometimes accepts the regular plan of a scheme as collateral while rejecting the direct plan of the same scheme, or the other way round. The scheme is identical in strategy, but only the version on the approved list qualifies. If your direct-plan units are not pledgeable, that is why. The remedy is to check the exact plan name on the approved-securities list rather than the fund name alone. The step-by-step flow is in how to pledge mutual funds for margin and Zerodha mutual fund pledge , and using pledged MF units for derivatives margin is covered in how to use mutual funds as F&O collateral .

The second is whole units. Fractional mutual fund and ETF units cannot be pledged; the pledge works only in multiples of one unit, so a holding of 12.457 units pledges as 12. Units under lock-in are also blocked. For an ELSS holding, only the free units that have crossed the three-year lock-in are pledgeable; units still inside the ELSS lock-in cannot be pledged.

Government securities, T-bills and SGBs

Government paper is fully accepted as cash-equivalent collateral once it reaches your demat account. Treasury bills bought through T-bill purchase on Zerodha and G-secs bought on Kite become pledgeable after settlement.

Sovereign Gold Bonds are pledgeable once they are credited to the demat account and listed, and appear on the approved list. Zerodha’s own worked example uses a 10% haircut, so Rs 100 of SGBs pledged gives Rs 90 of collateral. Pledging an SGB does not stop the half-yearly interest, which continues to be paid.

What cannot be pledged

Several instrument types are excluded outright. Bank fixed deposits and bank guarantees are not accepted as collateral for operational and maturity reasons. Coin fixed deposits, the small-finance-bank FDs offered inside Zerodha’s platform, also cannot be pledged for margin, even though they are DICGC-insured up to Rs 5 lakh. If you hold cash you want to deploy as collateral, the route is to buy an approved liquid fund or ETF and pledge that, not to lock the money in an FD.

Beyond instrument type, a specific holding can be blocked for several reasons even when the instrument category is eligible:

  • The security is not on the current approved list.
  • The holding has not yet settled in your demat account, so it is not pledgeable until settlement completes, which is T+1 under the current settlement cycle.
  • The member-wise maximum pledge limit for that instrument has already been reached at the broker level.
  • The F&O segment is not activated on your account, which is a prerequisite for pledging at all.
  • The security carries a Value at Risk of 100%, meaning it is too risky to accept as collateral.
  • The units are under lock-in, a fractional unit, or a direct-plan mutual fund the Clearing Corporation does not accept.
  • The security is already in a pending, success or overdue pledge status for the day, so it cannot be re-pledged the same day.
  • The shares were bought on margin trading facility and are already pledged to the broker for the MTF loan; these cannot be re-pledged for F&O margin until the MTF position is closed. The MTF-eligible set is a separate list, covered in MTF-eligible stocks on Zerodha .

How to check whether a holding is pledgeable

There are two reliable checks, and it is worth doing both.

The direct check is in Kite. Open Holdings, then Pledge for margin. Securities that are eligible can be ticked and carried into the pledge form; ones that are not eligible cannot be selected, or the pledge button does not appear for them. This reflects the live approved list and your account’s settings, including whether the F&O segment is activated . If a security you expected to pledge is not selectable, run through the exclusion reasons above.

The list check is on the approved-securities page. Search the exact security, including the plan name for a mutual fund, at zerodha.com/approved-securities. If it appears, it is eligible, and the page shows its haircut and collateral value; if it does not appear, it is not currently pledgeable. Because the Clearing Corporation revises the list, checking here also tells you the current haircut rather than a stale one. For the Value at Risk driving that haircut, and how the collateral figure is computed, see Zerodha pledge haircut explained .

Once you confirm eligibility, the pledge runs through CDSL authorisation. If you have not signed a DDPI, you approve the request with your CDSL TPIN and an OTP; generate the TPIN first via the CDSL TPIN flow if you have never set one. The credited collateral then shows on the Funds page as collateral equity on Kite or collateral liquid funds, ready to use for F&O margin . To release it later, follow how to unpledge holdings ; unpledging is free.

Frequently asked questions

Which securities can I pledge on Zerodha?
You can pledge approved stocks, ETFs, mutual funds, government securities, treasury bills and Sovereign Gold Bonds, but only those on the Clearing Corporation-set approved list published at zerodha.com/approved-securities.
Can I pledge mutual funds on Zerodha?
Yes, if the scheme is on the approved list and held in whole units. The Clearing Corporation sometimes accepts the regular plan of a scheme as collateral but not the direct plan of the same scheme, so check the list.
Can bank fixed deposits be pledged for margin on Zerodha?
No. Zerodha does not accept bank fixed deposits, bank guarantees or Coin fixed deposits as collateral. You pledge securities such as stocks, ETFs and liquid funds instead.
How do I check whether a holding can be pledged?
Open Holdings in Kite and use Pledge for margin; eligible securities can be selected. You can also search the security in the approved-securities list at zerodha.com/approved-securities, which shows its collateral value.
Why can I not pledge some of my holdings?
Common reasons are that the security is not on the approved list, is not yet settled in your demat, is a direct-plan mutual fund, a fractional unit, a locked security, or carries a Value at Risk of 100%.
Do Sovereign Gold Bonds count as pledgeable collateral?
Yes. Once SGBs are credited to your demat account and listed, and appear on the approved list, they can be pledged. A worked Zerodha example shows a 10% haircut, so Rs 100 of SGBs gives Rs 90 of collateral.

See also

External references

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. Zerodha Support, list of stocks and mutual funds that can be pledged, support.zerodha.com (accessed 1 July 2026).
  3. Zerodha, approved securities and haircut list, zerodha.com/approved-securities (accessed 1 July 2026).
  4. SEBI (Depositories and Participants) Regulations 2018, Regulation 43.

Conflict-of-interest disclosure. This article is published by the WebNotes Editorial Team for informational purposes and is written independently. WebNotes operates a Zerodha account-opening referral programme, disclosed on the pages that carry the referral link; this page does not carry it and earns no referral commission from the eligibility rules described here.

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