What is MTF?

You pay part of the price, the broker pays the rest, and the shares are pledged to the broker until you sell or repay.

1. You buy with MTF. You pick MTF when placing a delivery order (Paytm Money and m.Stock call it “Pay Later”) and pay the margin yourself. The rest is funded.
2. The broker pays the rest. This is a loan from the broker, and it charges interest on it.
3. The shares come to your demat, pledged. Since 2024 the shares land in your own demat account and are pledged to the broker automatically. They are yours, but you can’t move them while the loan is open.
4. Interest adds up every day until you sell or pay back the loan.
5. You sell, or convert to delivery. Selling repays the loan from the sale money. Paying the loan off yourself turns the shares into normal delivery holdings, at brokers that allow it.

Sources: SEBI circular on direct pay-out to your demat (via CDSL), 5 Jun 2024; NSE FAQ on Margin Trading Facility, updated 12 Mar 2025; each broker’s own pages, via our broker list

Interest is most of it, but brokerage, pledge, unpledge and DP charges add more: about ₹98 on top of interest in the example above.

Brokers advertise a rate, like Zerodha’s 0.04% a day or Groww’s 14.95% a year. That is only the interest. A round trip also pays brokerage on the buy and the sell, a fee to pledge and unpledge the shares, the DP charge when you sell, and GST on those fees. Kotak Neo’s 9.69% rate also needs a ₹249-a-month plan.

Our comparison adds all of these up for every broker, for your amount and days.

Sources: our broker comparison; each broker’s own pages, via our broker list

Losses grow as fast as gains, interest runs even when the price doesn’t move, and the broker can sell your shares if the price falls too far.

• Bigger losses. In the example, a 10% fall in the share price loses ₹13,333. That is 40% of the ₹33,333 you put in, before interest.
• Margin calls. If the price falls, you must add money or shares to keep the required margin. If you don’t, the broker can sell (square off) your shares, often at a bad moment.
• Interest keeps running. A stock that goes nowhere still costs you interest every day.

Sources: NSE FAQ on Margin Trading Facility, updated 12 Mar 2025

Only “Group I” stocks and equity ETFs: the most traded, most liquid ones. Each broker then picks its own list from these.

Exchanges sort stocks into groups by how often they trade and how easy they are to buy and sell. Only Group I qualifies for MTF. Brokers that publish a count offer from 1,000+ (Motilal Oswal) to 1,700+ (Dhan). They let you buy up to 4x to 5x the money you put in, so you pay at least 20% to 25% of the price; HDFC Sky, Upstox, Zerodha allow up to 5x. Riskier stocks get less.

Sources: NSE FAQ on Margin Trading Facility, updated 12 Mar 2025; each broker’s own pages, via our broker list

It suits someone with a clear short-term view who can add money if the price falls. It doesn’t suit long holding or money you can’t afford to lose.

MTF can make sense when you expect a move within days or weeks and have spare cash ready for a margin call. It is a poor fit for holding for months, because interest keeps adding up, and for anyone who would be forced to sell at a loss if the price dips.

Sources: this site’s own reading of the costs and risks above