Benefit of Pledge?

hi all of u in tradingq&a, i am almost new in xerodha and stock marlet also, i want to know what is the benefit of pledging?
dont have any clear concept about it,some frnds tell that thats mean i give those stocks to broker,and i will get benefited, but dont know what benefit, i hope experienced members help me regarding this.

A lot of users have Stocks & ETFs in their holdings, but will have limited cash margins, due to which they may lose trade opportunities. In such circumstances, you can pledge your shares/ETFs for collateral margins, which you will receive after a % deduction called haircut.

The margin received from pledging i.e collateral margin can be used for trading Equity Intraday, Futures long & short & Options writing.The collateral margin will be adjusted for the price variations in the security end of day, every trading day, which can be checked in Q backoffice under holdings.

The collateral amount received will be included in total margin available and shown separately under the collateral heading in Funds tab on Kite.

Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin.

If you don’t have enough cash, your account will be in debit balance and there will be a delayed payment (interest) charges charge of 0.05% per day applicable on the debit amount.

So, if you take positions that requires a margin of Rs 1 lakh, you will need at least Rs 50,000 in cash irrespective of how much collateral margin you have. Assuming you don’t have this Rs 50,000, whatever you are short by will be the debit balance for the day, and delayed payment (interest) charges will be applicable for that amount.

Click here to know more about pledging.

Also check out this post on tradingqna to know more.