What Is Margin Trading (MTF) and How Does It Work?

Margin in one sentence

Margin means putting up only part of the value of a position, with the rest provided as leverage by your broker (intraday) or funded by the broker with interest (MTF).

Intraday margin

For same-day positions, the minimum margin is based on the exchange's margins for each stock (VaR + ELM). Since SEBI's peak-margin framework was fully phased in (2021), the leverage available for cash-market intraday trades is limited compared with earlier years. Your broker's margin calculator shows the exact requirement.

Margin Trading Facility (MTF)

MTF is a SEBI-regulated facility where the broker funds part of a delivery purchase. You pay a margin (a percentage set by the stock's category and the broker), the broker pays the rest, and the shares are pledged in the broker's favour. You pay daily interest on the funded amount until you pay it back or sell.

Published MTF interest examples (checked 30 September 2026): Zerodha 0.04% per day; Angel One 0.041% per day; Groww 14.95% per year; ICICI Direct 17.99% per year. See each broker review for details.

Example

You buy shares worth ₹1,00,000 with MTF, paying ₹25,000 margin. The broker funds ₹75,000 at 0.04% per day — about ₹30 per day or ₹900 for 30 days, before brokerage and statutory charges. If the stock falls 20%, your ₹25,000 margin loses ₹20,000 — an 80% loss on your own money.

Margin calls

If the value of your position falls and margin falls short, the broker will ask you to add funds or will sell the position. Exchange penalties may apply to shortfalls.

Pledging shares for margin

You can also pledge shares you already own to get collateral margin for trading. A haircut is applied to their value. Brokers may charge a pledge/unpledge fee.

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