Why only liquid funds allowed for pledging?

@nithin @siva. I have queries regarding mutual fund pledging.

  1. why only growth liquid funds allowed.

  2. why all funds with conservative nature are not allowed like balanced funds, gold funds, arbitrage funds etc.

  3. whether only existing liquid mutual funds will be allowed in future also.

    Pls give clarification.

Currently only these are offered, we intend to include other type of mutual funds in the future as well.

Why only growth for liquid is because reconciling dividends is quite a tough process. All dividends we will have to shift from our pledge to your bank account regularly, quite a painful and operational heavy/risky process.

But . As per the sebi norms ; the dividends are directly credited to the bank accounts of the client holder ; then what pain process u r talking about ?

When you pledge the security, doesn’t it move from your demat account? So if it moves, you are no more the owner of the security. Which means dividend will not be credited to your bank account, but it will be to our account as the security will be lying under our name.

But that said, the recent SEBI circular has made changes to how pledging works in India. From June 1st onwards, security will continue to lie in your demat account. Once that happens, we can allow anything to be pledged.


Dear @nithin, can you plz provide details about this and will Client POA still be req for Pledge.


Check this


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Thanks for your reply @nithin

Yes I see from JUNE 2020 POA is not Mandatory.
Good step from SEBI for PLEDGING.

Still only liquid funds are allowed. Can we expect, large cap and multicap funds for pledging.

Yes, but will take some time. We are working on this.

Already Nithin told same thing one year earlier. Not happened yet. Query is to understand from when positively multicap and large cap will be allowed.
As both asset classes of MFs are both stable. So, blindly can be invested for corpus. If given will be greatfull.

No reply @nithin

The way stocks and securities can be pledged is going to change very soon. Unlike now where the security moves out of your demat, it will continue to remain in your demat pledged. Once this happens, we can accept MF’s as well very easily. It was supposed to happen by June 1st, but might take another month with this lockdown.

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super. Does all mutual funds will be given chance for pledging. No partiality right. @nithin

Yeah, apart from those which have a lock in (tax saving funds)


What does DR,DP and GR means in this report attached? Does Zerodha accept all these MF’s as pledge ? Where can I get proper names (Symbols for these securities) ?
Also why not does Zerodha accept Bank FD as collateral ?

Report of Haircut for Mutual funds

@nithin eagerly waiting for announcement for pledging all mfs except else funds. When can we get.

Can bharatbond ETF can be treated as cashequivalent after pledging.

Why long term trading options are not available for trading in zerodha.

New pledge system is postponed to august 1st, so after that.

You can check here to know about haircuts and what comes under cash equivalent, bharathbond does not comes under cash equivalent.

They are available,you can check and confirm.

yes its available now thank you

@Bhuvan, will Zerodha also allow Debt Mutual funds for pledging like Banking and PSU, Low duration and ultra short duration funds ?

Will allow few after new pledging comes into effect from August 1st, but those funds should be in the approved list of clearing corporations.