By having a small 3 to 4% buffer, we ensure that customer, as soon as taking a trade, doesn’t end up being short margin and hence pay a margin penalty. Otherwise, square-offs will have to happen much faster.
There is no EOD penalty; there is upfront and non-upfront. If the margin goes up by the end of the day, it is called upfront, and brokers have to pay the penalty from their pockets. Check this post.