MTF interest and brokerage at Zerodha

From WebNotes, a public knowledge base. Last updated 11 May 2026. Reading time ~8 min.

Overview

The Margin Trading Facility (MTF) at Zerodha allows eligible clients to purchase equity shares by paying only a portion of the total purchase value (the margin amount), with Zerodha funding the remainder. The funded portion is essentially a loan from the broker, and interest accrues on it at a daily rate of approximately 0.04 percent per day (approximately 14.6 percent per annum as of mid-2026). Normal brokerage also applies on MTF trades at the same rates as for delivery trades (zero brokerage on equity delivery), and all statutory levies – STT, exchange charges, stamp duty, GST, and the SEBI turnover fee – apply in full.

MTF is a SEBI-regulated facility that enables investors to take delivery positions larger than their available funds, holding the shares in the portfolio while the interest accrues daily. It differs from intraday margin (MIS) in that MTF positions remain open until the client chooses to close them or until Zerodha triggers a margin call, without the compulsion to square off by day-end.

Regulatory framework

MTF is governed by SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/33 (March 2019) and subsequent amendments. SEBI’s framework prescribes:

Eligible securities: only SEBI-approved Group 1 securities (liquid and well-traded equity shares from NSE and BSE F&O lists) can be purchased on MTF
Minimum client margin contribution: the client must fund at least 50 percent of the purchase value (or the VaR + ELM margin, whichever is higher, as prescribed by SEBI)
Maximum holding period: no fixed mandatory maximum, but brokers must monitor margins and call for additional margin if the portfolio value falls
Interest disclosure: brokers must disclose the interest rate at the time of MTF activation

Zerodha’s MTF is offered under this framework and is available only to clients who have specifically opted in by accepting the MTF Terms and Conditions.

MTF interest rate

Parameter	Value (as of mid-2026)
Interest rate	Approximately 0.04% per day
Annualised rate	Approximately 14.6% per annum
Basis	On the funded (borrowed) amount outstanding
Accrual	Daily
Debit	From trading ledger, typically monthly or at position close

The interest rate is variable and subject to change by Zerodha with advance notice. Clients should verify the current rate on Zerodha’s charges page or in their MTF account terms.

Example: A client uses MTF to buy Rs 1,00,000 of shares, contributing Rs 50,000 of their own funds. Zerodha funds Rs 50,000. Daily interest = 0.04% x Rs 50,000 = Rs 20. After 30 days, total interest = Rs 600.

Brokerage on MTF trades

MTF purchases are treated as delivery trades for brokerage purposes. Zerodha charges zero brokerage on the MTF buy order (because it is a delivery CNC order). When the shares are eventually sold (whether to close the MTF position or after the client funds the full amount and moves to a free delivery position), the sell order also carries zero brokerage.

All statutory charges (STT, stamp duty, exchange charges, GST, SEBI fee) apply on MTF trades in the same manner as regular delivery trades. The stamp duty on the buy side (0.015 percent of turnover) and the DP charge on the sell side (Rs 15.93 per ISIN per day) both apply.

Margin requirement calculation

SEBI requires that the client’s funded margin for an MTF position is maintained above the prescribed minimum at all times. The funded amount is:

Minimum margin = VaR + ELM (as prescribed by SEBI for the scrip’s risk group)
The client must maintain this margin either in cash or as approved collateral (shares pledged with Zerodha)

If the portfolio value falls due to a decline in the price of the MTF-purchased shares, the margin shortfall triggers a margin call. Zerodha sends notifications and, if the shortfall is not rectified within the specified timeframe, Zerodha may liquidate MTF positions to recover the funded amount plus accrued interest.

Eligible securities

Only SEBI-approved Group 1 securities (stocks that are part of the NSE F&O list or equivalent SEBI-approved list) are eligible for MTF. Mid-cap and small-cap stocks that are not in the approved list cannot be purchased on MTF. Zerodha maintains a list of MTF-eligible scrips on its platform, which is updated periodically as SEBI revises the approved list.

Risk factors

MTF amplifies both gains and losses. If shares purchased on MTF appreciate, the gain is on the full position (including the funded portion), but interest is only on the funded amount. If shares depreciate:

The capital loss is on the full position (not just the client’s margin contribution)
Interest continues to accrue on the funded amount regardless of market direction
A sustained adverse price move can result in a margin call that forces the position to be closed at a loss

Example of loss amplification: Client buys Rs 1,00,000 of shares on MTF (50% client, 50% Zerodha). Share price falls 30% to Rs 70,000 total. The client’s loss is Rs 30,000 on a Rs 50,000 contribution – a 60% loss on invested capital, plus accrued interest.

Converting MTF positions to full delivery

If a client’s financial position improves or they decide to own the shares outright (without the MTF loan), they can “convert” the MTF position by transferring sufficient funds to Zerodha to repay the funded portion. After repayment, the shares move from the MTF collateral account to the client’s demat account as free delivery holdings. No additional brokerage is charged on this conversion, though the shares’ demat account status changes.

Comparison with MIS intraday margin

Feature	MTF	MIS intraday
Position duration	Can be held overnight and longer	Must be squared off same day
Interest	Yes, accrues daily on funded amount	No interest (no funding; pure leverage)
Brokerage	Zero (delivery)	0.03% or Rs 20 per order
STT on buy	0.1% (delivery rate)	Nil
STT on sell	0.1% (delivery rate)	0.025%
Margin requirement	VaR + ELM (minimum 50% client)	SEBI-set VaR + ELM for intraday

MTF is suitable for investors who want to hold a position for several days or weeks beyond their available cash, while MIS is for same-day speculation without an interest charge.

Comparison with personal loan or overdraft

The MTF interest rate of approximately 14.6 percent per annum is broadly comparable to personal loan rates from banks (12 to 18 percent) and overdraft facilities on savings accounts. It is lower than credit card interest rates (36 to 42 percent). Investors comparing MTF with using a personal loan or credit card to fund equity purchases should note that MTF interest is paid on the exact amount borrowed for the exact number of days, without EMI obligations.

References

SEBI Circular on Margin Trading Facility – SEBI/HO/MIRSD/DOP/CIR/P/2019/33 (March 2019)
SEBI Master Circular for Stock Brokers, SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/72
Zerodha MTF product page, zerodha.com/margin-trading-facility (accessed May 2026)
Zerodha Charges page, support.zerodha.com/category/charges (accessed May 2026)
Finance Act 2004, Chapter VII (STT rates on delivery)
Indian Stamp Act 1899, as amended by Finance Act 2019

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WebNotes Editorial Team

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.

Last reviewed: 11 May 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.