Does Zerodha provide collateral margins for trading if I pledge my bank FDs (Fixed Deposits)?
No, Zerodha does not accept margins from clients in the form of Fixed Deposits and/or Bank Guarantees. This is because of the underlying operational and reconciliation constraints attached with accepting such instruments. These instruments are also subject to maturity and need to be renewed frequently to continue getting the margin benefits in your account.
An alternative to providing Fixed deposits as margins, is to invest your capital in a Liquid fund and provide such Liquid funds as margins which Zerodha accepts as collateral. The haircut on most liquid funds is only 10%. You can also choose to invest in Government Securities and provide these as collateral to raise margins. The entire list of instruments accepted as margins is available here.
The process can be done completely online. To know more about pledging and how it works, click here.