Margin Trade Funding in India — the complete guide

What is MTF?

Margin Trading Facility (MTF) is a SEBI-regulated product that lets you buy shares for delivery by paying only part of their value upfront. Your broker funds the rest, and you pay interest on the borrowed amount for as long as you hold the position. The shares you buy are held as collateral (pledged to the broker) until you repay.

It is sometimes called "pay-later" or "buy-now-pay-later for stocks", because you take delivery of the shares today and settle the funded portion later. Unlike intraday trading, MTF positions can be carried overnight and held for days, weeks, or months — as long as you keep the required margin and pay the interest.

How MTF works

The mechanics are straightforward once you see the four moving parts: your margin, the broker's funding, the pledge, and the daily interest.

• You deposit the initial margin — a percentage of the trade value, in cash or as approved pledged securities.
• The broker funds the balance — up to the regulatory limit for that stock.
• Shares are pledged — the funded shares are held in a designated "Client Securities under Margin Funding Account" by way of pledge. You remain the owner and receive dividends and corporate-action benefits.
• Interest accrues daily — charged only on the funded amount, only for the days you hold, typically from T+1 until you sell or repay.

SEBI rules & regulations

MTF is tightly regulated. The key rules brokers and investors must follow:

• Only registered brokers with adequate net worth and risk-management systems may offer MTF.
• Margin must be collected upfront. The exact percentage is set per stock based on its risk (VaR + ELM margins as in the cash segment), so a more volatile stock requires a higher margin and offers less leverage. There is no single flat leverage number across all stocks.
• Initial margin may be in cash, cash-equivalents, or approved Group I securities/ETFs, after an appropriate haircut.
• Funded shares are held only by pledge in a separate, tagged demat account — brokers cannot use one client's securities to fund another's trades.
• Broker exposure limits: a broker's total MTF indebtedness cannot exceed 5× its net worth, and exposure is capped relative to borrowed funds plus net worth.
• Separate client-wise records for funds and securities must be maintained.

Which stocks are eligible

Not every stock can be bought on MTF. SEBI permits MTF only on Group I securities — the most liquid, stable stocks and certain ETFs — selected on liquidity and volatility criteria. The exchange publishes and updates this list.

• Your broker may apply a further, narrower list than the full exchange-approved universe.
• If a stock is removed from the approved list, brokers can square off the funded position.
• The number of eligible scrips varies by broker — commonly anywhere from ~900 to ~1,300+ stocks.

On this site, the daily dashboard shows the full set of scrips actually funded under MTF across the market on the latest reporting day — typically around 2,100 securities.

Costs & interest

The headline cost is interest on the funded amount, but it isn't the only one. Budget for all of these:

• MTF interest — across the industry, roughly 9%–18% per annum (about 0.025%–0.05% per day), charged daily on the funded portion only, for the days you hold.
• Brokerage — typically ₹20 flat or ~0.1%–0.3% per order.
• Pledge / unpledge charges — roughly ₹15–₹25 plus GST per scrip.
• Statutory charges — STT, exchange transaction charges, stamp duty, GST and (on sell) DP charges, as applicable.

Risks & margin calls

MTF is a leveraged product, so the risks are real and specific:

• Amplified losses. Leverage magnifies downside exactly as it magnifies upside. A position can lose more than your initial margin.
• Margin calls. Positions are marked to market every trading day. If the stock falls and your margin drops below the maintenance level, the broker issues a margin call — you must add funds or collateral by the deadline.
• Forced liquidation. If you don't meet the margin call in time, the broker can sell your funded shares at whatever price is available — potentially crystallising a large loss.
• Interest drag. The longer you hold, the more interest compounds against your return.
• Eligibility changes. A stock dropping off the approved list can trigger square-off.

MTF vs other ways to take leverage

MTF vs intraday (MIS)

Intraday positions must be squared off the same day; MTF lets you carry delivery positions overnight and hold them. MTF charges interest for the holding period; intraday doesn't, but forces same-day exit.

MTF vs futures

Futures give leverage too, but they expire, are available only on F&O stocks/indices, involve mark-to-market on a contract, and don't give you ownership of shares. With MTF you own actual shares (pledged), receive dividends, and there's no expiry — you can hold as long as margin is maintained.

MTF vs a loan against shares (LAS)

LAS is a separate borrowing against your existing holdings, usually at different rates and tenors. MTF is purpose-built into the trading workflow for buying eligible stocks on margin.

Advantages & disadvantages

When MTF makes sense

MTF tends to suit a high-conviction, short-to-medium-term position in a liquid stock, where you expect a move large enough to comfortably cover the interest, and you have buffer capital to meet a margin call. It is generally not a fit for beginners, for thinly-conviction "punts", or for indefinite long-term holds where interest quietly eats the return.

How to start

1. Have an active demat & trading account with a broker that offers MTF.
2. Activate the MTF facility and accept the Rights & Obligations document — read the square-off and margin-call terms carefully.
3. Keep sufficient margin (cash or pledged Group I collateral).
4. Place an MTF / "Margin" order on an eligible stock — on most platforms it's as simple as choosing the MARGIN product type.
5. Monitor daily — watch your margin level and the interest accruing, and have an exit plan.

Compare brokers' rates, leverage and eligible-stock counts on our Brokers page, and see the live market-wide picture on the daily dashboard.