Collateral on WebNotes

Cash component vs collateral component

Wed, 20 May 2026 00:00:00 +0000

For F&O margin on Zerodha, the SEBI framework requires that the user maintain a specific split between cash component and collateral component. The 50:50 rule mandates at least 50% in cash; the rest can be from pledged collateral.

What counts as each

Cash component (at least 50%)

Free cash in trading account.
Liquid fund collateral (LIQUIDBEES, similar; haircut-adjusted).
Option premium credit on short positions.
T-bill / specific liquid debt collateral.

Collateral component (up to 50%)

Pledged equity (haircut-adjusted).
Pledged ETF (non-liquid; haircut-adjusted).
Pledged corporate bonds.

The total = cash + collateral.

Collateral (equity) on Kite

Wed, 20 May 2026 00:00:00 +0000

Equity collateral on Kite is the haircut-adjusted value of equity holdings pledged for F&O margin. It appears on the Kite funds page as one component of margin available, alongside cash and liquid fund collateral.

How collateral works

When you pledge an equity holding via Margin pledge , the depository (CDSL or NSDL) marks the shares as encumbered. The broker accepts them as collateral at a discounted value (after haircut ).

Holding	Market value	Haircut	Collateral value
100 RELIANCE @ Rs 2,900	Rs 2,90,000	12.5%	Rs 2,53,750
500 NIFTYBEES @ Rs 220	Rs 1,10,000	10%	Rs 99,000
1,000 HDFC AMC @ Rs 2,500	Rs 25,00,000	30%	Rs 17,50,000

The haircut reflects the scrip’s volatility, liquidity, and risk classification. Highly liquid large-caps have lower haircut (10-15%); midcap and smallcap scrips have larger haircut (20-50%).

Collateral (liquid funds) on Kite

Wed, 20 May 2026 00:00:00 +0000

Liquid fund collateral on Kite is the haircut-adjusted value of liquid debt mutual fund units pledged for F&O margin. It has two advantages over equity collateral: lower haircut, and classification as cash-equivalent for SEBI’s 50:50 cash component rule.

Why liquid fund collateral is preferred

Aspect	Equity collateral	Liquid fund collateral
Haircut	10-50% (depends on scrip)	Typically 5-10%
Counts as cash for 50:50	No (counts as non-cash)	Yes (cash-equivalent)
Liquidity	Daily intraday sell	T+1 redemption
Volatility	High (equity)	Low (liquid debt)
Pledge fee	Same	Same

For an F&O trader who needs to meet the 50% cash requirement without keeping idle cash, liquid fund collateral is the efficient solution: it earns money market returns (~5-7% per annum), counts as cash for margin, and supplies collateral with low haircut.

How to verify collateral details on Zerodha

Wed, 20 May 2026 00:00:00 +0000

To verify pledged collateral details on Zerodha:

Conflict-of-interest disclosure. This guide 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 guide does not carry it and earns no referral commission from the procedure described here.

Step-by-step procedure

Six steps per the procedure infobox. The notes below cover what to verify.

LIQUIDCASE as collateral on Zerodha

Wed, 20 May 2026 00:00:00 +0000

LIQUIDCASE ETF can be pledged as collateral on Zerodha to get trading margin while keeping the idle cash earning 1-day overnight returns.

How it works

Buy LIQUIDCASE on Kite with idle cash.
Pledge units via Zerodha Console.
Get margin (after haircut) for F&O / equity intraday.
Earn LIQUIDCASE NAV growth daily.
Unpledge when no longer needed.

Haircut

ETF	Haircut
LIQUIDCASE	~10% (subject to SEBI category caps)
Equity ETFs	15-25%
Debt ETFs	10-15%

Margin = LIQUIDCASE value x (1 - haircut). Rs 1 lakh pledge gives ~Rs 90,000 margin.