Will physical settlement occur if there is no cash available but LiquidBees are pledged?
To ensure physical settlement of open F&O stock positions, maintaining the required F&O margins in either cash or pledged collateral is necessary. To learn more, see What is pledging, and how does it work?
In the scenario where there is no cash balance, but sufficient collateral has been pledged, the open F&O stock positions can be physically settled to the demat account. However, the fund balance will turn negative in the funds statement by the amount of the physical delivery settlement value and associated charges.
Interest will be charged on the negative ledger balance until funds are added to Zerodha account or the collateral/holdings are sold in accordance with Zerodha's policy.