What is the interest rate for using MTF and how is it calculated?

You can use Zerodha's Margin Trading Facility (MTF) to buy shares by paying only part of the price initially, while Zerodha funds the remaining amount. Zerodha charges a daily interest rate of 0.04% on the funded amount. You can use the MTF calculator to calculate your interest charges and required margins based on your holding period.

How MTF interest is calculated

Here's how the calculation works if you buy a stock that qualifies for 3x margin in MTF and sell it after 10 days:

Funded amount calculation

• Total value of 3 shares at ₹1,000 each = ₹3,000
• Your payment: ₹1,000
• Funded amount by Zerodha: ₹3,000 - ₹1,000 = ₹2,000

Interest calculation

• Daily interest: ₹2,000 × 0.04% = ₹0.80
• Interest for 10 days: ₹0.80 × 10 = ₹8

You would pay a total interest of ₹8 for holding the shares for 10 days.

Additional costs for using MTF

Along with the daily interest rate, these additional costs apply when using MTF:

• Brokerage: ₹20 or 0.3% per MTF order execution, whichever is lower for both intraday and delivery trades.
• Square-off charges: ₹50 + 18% GST per order squared off by Zerodha.
• Pledge and unpledge charges: MTF stocks are automatically pledged when you buy and unpledged when you sell. A pledge fee of ₹15 + 18% GST applies once per day for each stock you buy, regardless of how many times you buy it that day. When you sell, an unpledge fee of ₹15 + 18% GST applies for each distinct day that the sold stock was originally purchased.

Example scenario

1. If you buy the same stock (e.g., ABC) using MTF multiple times on the same day, you are charged ₹15 + GST just once for that day.
2. If you buy ABC using MTF again on another day, the ₹15 + GST charge applies again for that day.
3. If you also buy a different stock (e.g., XYZ) using MTF on the same day as ABC, a separate ₹15 + GST is charged since it’s a different ISIN.
4. When you sell these stocks, unpledge charges apply per ISIN per day of purchase. So unpledging would cost ₹15 + GST for ABC (day 1), ₹15 + GST for ABC (day 3), and ₹15 + GST for XYZ, amounting to ₹45 + GST.