Pledge and unpledge charges at Zerodha

Overview

Zerodha clients who wish to use their existing equity holdings as margin collateral for futures and options trading must pledge those shares with Zerodha. The pledge creates a lien on the shares in favour of the broker (and ultimately in favour of the exchange’s clearing corporation). Zerodha charges Rs 30 plus 18 percent GST (total Rs 35.40) per pledge instruction, and the same charge applies per unpledge instruction when the lien is released.

The pledge mechanism at Zerodha operates through CDSL’s Pledge and Re-pledge System, which was restructured by SEBI in 2020 as part of reforms to the margin pledging framework. Under the revised system, clients retain beneficial ownership of pledged shares in their own demat accounts (the shares are not transferred to the broker’s account); only a lien is created. This is a significant improvement over the older Power of Attorney-based system where shares could be moved to the broker’s pool.

Charge structure

A single pledge instruction may cover multiple shares of one ISIN. Pledging 500 shares of Reliance Industries in one instruction incurs one Rs 35.40 charge. Pledging 500 shares of Reliance and 300 shares of HDFC Bank requires two separate instructions (two ISINs), incurring two Rs 35.40 charges = Rs 70.80.

How the pledge system works

Pledge creation

1. The client logs into Zerodha Kite or Console and selects shares to pledge.
2. Zerodha sends a pledge request to CDSL for the specified ISIN and quantity.
3. The client receives an OTP-based authorisation request from CDSL.
4. On OTP confirmation, CDSL creates a lien on the shares in the client’s demat account.
5. Zerodha credits the client’s margin account with the collateral value (typically 80 percent of the market value of the pledged shares, after a haircut).

Use of collateral margin

The collateral margin received from pledged shares can be used to trade futures and options, subject to SEBI’s margin norms. SEBI rules require that at least 50 percent of the margin for F&O positions be in cash or cash equivalents; collateral from shares can meet up to 50 percent of the margin requirement. This proportion requirement was introduced by SEBI’s circular on margin pledge and re-pledge (2020).

Unpledge

When the client no longer needs the collateral, they request an unpledge through the Kite or Console platform. Zerodha submits an unpledge instruction to CDSL. Unlike the pledge (which requires the client’s OTP authorisation), unpledging does not require the client’s OTP – it is initiated by the broker and is processed by CDSL. The lien is released, and the shares revert to free holdings in the client’s demat account.

Re-pledge to clearing corporation

Zerodha, as a SEBI-registered broker, is required to re-pledge the shares received from clients to the exchange’s clearing corporation (NSCCL for NSE, ICCL for BSE, MCXCCL for MCX). This re-pledge is the mechanism by which the clearing corporation holds lien over shares as margin against F&O positions. The re-pledge is done by Zerodha without any additional charge to the client.

Haircut on pledged shares

The value of the margin credit received for pledged shares is less than the full market value due to the application of a haircut. SEBI prescribes minimum haircut percentages based on the VaR (Value at Risk) of each security. Typically:

• Blue-chip liquid stocks (Group A, F&O-listed): haircut of 15 to 25 percent
• Mid-cap stocks: haircut of 25 to 35 percent
• Illiquid or volatile stocks: higher haircuts or ineligible

If a stock’s market value is Rs 1,00,000 and the haircut is 20 percent, the collateral margin credit is Rs 80,000.

Impact of market price changes on pledged shares

As the market value of pledged shares changes, the available collateral margin changes proportionally. If pledged shares decline in value, the margin credit decreases and may cause a margin shortfall in the F&O account. Zerodha sends alerts when the margin falls below the required level. If the shortfall is not rectified by adding cash or pledging additional shares, Zerodha may liquidate F&O positions to bring the margin back to compliance.

Approved securities for pledge

Not all securities are eligible for pledging as margin. Zerodha maintains a list of approved securities, which is generally aligned with the SEBI-approved Group 1 securities list (same as the MTF eligibility list). Non-approved securities (illiquid stocks, penny stocks, securities under ban for F&O) cannot be pledged.

Comparison with other brokers

Pledge/unpledge charges at major brokers as of mid-2026:

Upstox and Angel One offer lower pledge charges. For active F&O traders who pledge and unpledge frequently, the per-instruction charge can accumulate – monthly pledging and unpledging of 10 different ISINs would cost Rs 708 per month at Zerodha.

Pledge versus selling shares for margin

An alternative to pledging shares is to sell them and use the cash proceeds for F&O margin. The decision depends on:

• Tax consequences: selling triggers STT and potential capital gains tax; pledging is not a taxable event
• Opportunity cost: pledged shares continue to earn dividends and can appreciate; sold shares are liquidated
• Charges: pledging incurs Rs 35.40 per instruction; selling incurs STT, DP charge, and other levies which typically exceed Rs 35.40
• Margin efficiency: cash is 100% margin-effective; pledged shares are only 80% margin-effective (after haircut)

For investors who want to participate in derivatives without permanently selling long-term equity holdings, pledging is the standard mechanism.

See also

• Zerodha brokerage structure overview
• DP charges on Zerodha
• MTF interest and brokerage
• DDPI one-time charge
• F&O futures brokerage
• GST on broking charges
• SEBI
• Zerodha

References

1. SEBI Circular on Pledging of Securities – SEBI/HO/MRD2/DCAP/CIR/P/2020/192 (October 2020)
2. SEBI Circular on re-pledging by trading members – SEBI/HO/MRD2/DCAP/CIR/P/2020/234
3. SEBI (Depositories and Participants) Regulations 2018, Regulation 43 (pledge of securities)
4. CDSL Operational Circular on Pledge and Re-pledge System (2020)
5. Zerodha Charges page, support.zerodha.com/category/charges (accessed May 2026)
6. SEBI Master Circular for Stock Brokers, SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/72