Zerodha (Trading Account)
FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
Zerodha (Trading Account)
FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
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Published on Monday, November 11, 2019 by Chittorgarh.com Team | Modified on Friday, July 24, 2020
Margin trading facility (MTF) is a service offered by brokers to stock market investors to buy shares by paying only a fraction of the total trade value. The broker funds the balance amount and charges interest on it. The fraction amount paid by the investor is called a margin.
A few brokers in India offer margin funding to non-resident Indians (NRIs). This includes Tradeplus.
Margin funding works in 2 ways:
Margin Trading is only available in select company stocks as predefined by SEBI and Exchanges. The margin percentage is also approved by the SEBI and stock exchanges. You can avail up to 75% of the trading value as margin amount.
Note: Each broker has his own payment terms, maximum loan duration and interest rates.
In normal trading, an NRI can place a buy order and the full trading value is debited from your NRI bank account once the order is executed. The shares are credited in your NRI demat account in T+2 days where T is the day of your trade.
In margin trading, you can place a buy order and only the margin amount is deducted from your account on order execution. The shares are credited to your demat account in T+2 days. The rest of the amount is funded by the stock broker as a short term loan to the investor.
Broker |
Brokerage |
| Tradeplus | 0.40% (NRE) and 0.30% (NRO) |
Note:
An NRI customer is not generally eligible for margin trading facility. Currently, only Tradeplus offers the margin trading facility to NRI clients with certain restrictions.
Restrictions on MTF:
Currently, only Tradeplus offers the margin trading facility to NRIs. The facility is not available with other stock brokers.
NRIs can avail a maximum of 75% margin funding on some select stocks as approved by SEBI.
The percentage of margin funding is predefined by SEBI and stock exchanges.
Not all stocks are eligible for margin funding. Also, the extent of margin funding varies from broker to broker.
The margin funding for NRIs is only available for the Equity Cash segment for selected stocks. Only stocks from NSE can be bought through this facility.
Currently, only Tradeplus offers the margin trading facility to NRIs. If you have an NRI trading account and NRI demat account with Tradeplus then you need to access it's trading software and activate the MTF trading facility. The MTF facility will be activated within 15 minutes and you're ready to place MTF orders.
If you don't have an NRI trading account with Tradeplus then please follow the steps listed here to open a Tradeplus NRI account.
As per RBI guidelines, an NRI is allowed to pledge their shares with Indian banks, overseas banks, and Non-Banking Finance Companies (NBFC) for genuine business purposes. It is a general rule that the NRI shareholders are required to submit the declaration that the funds so availed as loan have been utilized for declared purposes only. An NRI can approach their banks for any guidance required in this regard.
The below table provides a summarized view on NRI pledging:
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Shares can be pledged with |
Purpose |
Primary Condition for pledging |
|---|---|---|
|
Authorised Dealer [AD] Bank in India |
To avail loan for resident investee Indian company |
Indian company should follow all SEBI disclosure norms |
|
Overseas Bank |
To avail loan for the non-resident investor or for the overseas group company |
The loan should be availed from the overseas bank only and should be utilized for overseas business purposes only. Such funds should not be directly or indirectly be linked to any investments in India. |
|
NBFC [AD bank has been delegated with the power to pledge NRI shareholding with NBFC] |
To avail loan for the resident investee Indian company |
Pledging of only listed equity shares on a recognized stock exchange is allowed. |
An NRI is not allowed to pledge mutual funds for trading.
As per RBI guidelines, an NRI is allowed to pledge their shares/securities with Indian banks, overseas banks, and Non-Banking Finance Companies (NBFC) only for genuine business purposes and not for trading purposes.
Generally, every NRI appoints a Power of Attorney (PoA) to help NRI overcome any difficulties due to geographical boundaries. However, there are some restrictions on PoA that every NRI and PoA holder should be aware of.
A PoA is not allowed to do the following:
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