Pledging security (stocks)

Is there any interest on the collateral margin obtained by pledging stocks? For example, if I pledge some of my stocks and use the collateral margin for trading or hedging, will I have to pay interest for the peddling?

This link says 10.05% annualised return; can anyone from Zerodha please clarify?

Nope. There is no interest for using the margin you receive from pledging. However, for overnight positions, you need to maintain a minimum 50% margin in cash, and the remaining 50% can come from the collateral margin. If you use collateral margin more than 50%, interest will be applicable on the excess collateral margin used. You can check out this support article for more details:

Hi:

I am aware of this article and also know about the necessity of 50% cash or cash equivalence. I would like to be reassured about it as I use a sizeable funds. So could you please confirm the below mentioned point:

I do not have to pay any interest on the margin obtained from pledging of stocks or liquidness?

You don’t have to pay any interest on the margin received from pledging. Only instance when interest will be applicable is in the scenario mentioned above.

Thank you.

@ShubhS9 - Tagging on the question because I have similar query.

Based on your response, my understanding is that if someone does only Intraday trades(MIS–option selling) then he/she should be able take trades by only margin received by pledging & no cash is needed (by pledging stocks/mutual funds etc after the appropriate haircut )? Can you please confirm?

Also, on expiry day – Can we use NRML order type while using 100% pledged margin like above because positions would not be overnight?

Thanks

Right. Also, you can take position using NRML as well and square-off the same day. This will be intraday trade only.

You can.