Can we pledge stocks bought using MTF?

General
1

Recently I bought some stocks of value say 3 lakhs by putting 1 lakh INR in my kite zerodha account.
Now on smallcase there is a facility to get credit on our stocks and ETFs @10.4% p.a.
When I checked the available credit in smallcase it showed a little bit over 1 lakh. I know at the end of the process I would have to pledge the stocks to get the loan from smallcase. But wouldn’t the stocks bought via MTF be already pledged?

If not wouldn’t it create thereotically infinite money glitch? What am I missing here?

2

@Rohan_K Are you saying its a bug? Because Smallcase allows LAS only against stocks that are in your demat. They do not allow stocks that are in MTF mode.

3

@Rohan_K My common sense says that when you buy any qty under MTF, those shares are already pledged in the broker’s name with the Clearing Corporation. And as you know, whenever you take a LAS, the another broker who is providing the loan has to pledge those shares. But in the case of MTF, since the shares are already pledged with the first broker, the LAS provider can’t pledge again for a loan.

so no infinite money bro… sorry

4

I know the shares are pledged when we buy it using MTF but then why smallcase considers those shares and shows available credit limit?

5

I think that while it might be showing on the front end, but the request will likely be rejected when you actually try to place that LAS order.