Why can’t some holdings be pledged?

Some holdings cannot be pledged for the following reasons:

• Stocks or Mutual funds that are not present in the approved list of securities cannot be pledged. The approved list of securities that can be pledged can be found by visiting zerodha.com/approved-securities.
  
• The member-wise limit for the security is reached: The clearing corporation limits the total quantity of each approved security that can be pledged at the trading member level. Holdings cannot be pledged if the overall maximum pledge limit for the instrument has been reached. In such cases, the below message will be displayed on the Console when trying to place a pledge request:
  

• The derivative segment is not active: Holdings can only be pledged if the F&O segment is activated in the Zerodha account. If the F&O segment is not active, the message below will be displayed when placing a pledge request. To learn the steps to activate F&O, see How to activate F&O?
  

• If the stock’s Value at Risk (VAR) is 100%: Stocks with a VAR of 100% cannot be pledged as they are considered to be risky, and a margin will not be provided against them. Additionally, if a stock has already been pledged as collateral and its VAR reaches 100%, additional quantities of the same stock cannot be pledged. Visit zerodha.com/approved-securities to find the approved list of securities that can be pledged.

Example Scenario

Assume Mr X has 100 shares of company A and pledged 50 of them. If the company's VAR reaches the threshold of 100%, Mr X will not be able to pledge the additional 50 quantities.

• Pledge requests for securities under the lock-in period will be rejected.
• A fractional quantity of mutual funds schemes and ETFs cannot be pledged as pledge requests can be placed only in multiples of 1. To learn more, see What is a fractional share?

Did you know?

• Member-wise limit and segment status restrictions do not apply when stocks/MFs are pledged to avail Loan Against Securities (LAS) from Zerodha Capital. To learn more, see How to avail Loan against Securities (LAS) from Zerodha NBFC?
• Regular plans of some mutual fund schemes are accepted as collateral by the Clearing Corporation (CC), while direct plans of the same scheme are not. To learn more, see Why can regular plans be pledged but not direct plans of the same mutual fund scheme?
• Treasury Bills (T-bills) with a maturity of 364 days can now be pledged for collateral margin. T-bills with maturities of 91 and 182 days will soon be available.