What Is A Margin Pledge Facility How To Use It

By Abhishek katkar
What Is A Margin Pledge And How To Use It

What Is A Margin Pledge And How To Use It

Finance- Stock Market - What Is Margin Pledge


Here you know what is pledge and how it work.benefits and process of it and how you can use it without extra fund



Margin Pledge is a facility offered by Your broker to the investors to use it when investors needs money urgently or suddenly if any emergency occurs.

Investors, by using this margin Pledge facility can take a loan against the shares held in their account or which they have bought without paying any extra money or amount .



This is also simple because there is direct facility available in account so you can directly do it from your Account and place pledge request.

What Is Margin Pledge ?

Pledging, is the process of using your asset (held shares in  your account )  as a collateral to make available a financial or nonfinancial facility. Margin is a concept in trading that allows investors to leverage, and invest in deals without assuming the full risk at the first stage. In Margin Pledging, the investor pledges his asset (shares in the Depository Account) in favour of the broker for taking  leverage benefits. Margin Pledge is a process of creation of pledge in securities held in a depository account of the customer as margin for  making available  margin benefit for trading in Cash/FO/CD segment.

For example in other words The investor take the loan against the share which they hold in their account from broker by placing or by using the margin pledge facility.

What is margin pledge mechanism.....?

This is new revised rule introduced by SEBI  ( Security And Exchange Board Of India ) That the mitigates the risk of misuse of the client/customer/ investor security( shares / stocks ) available with the broker. This misuse  would include use of one client’s securities to meet the exposure, margin or settlement obligations of another client. Hence the transfer of the securities to the de-mat account of the broker for margin purposed has been stopped .

As per new revised mechanism the broker shall accept collateral from clients ( investors ) in the form of securities, only by way of ‘margin pledge, Which is created in the Depository system. ( csdl/ nsdl)


What is required to pledge request ?

To place the pledge request the investor as well as broker both should have account the same depository. ( CSDL / NSDL )

How To Place Pledge Request

• login to you DP login in your account.

•   Select your depository service ( NSDL / CSDL )

• Enter you bank account and Pan no.

•  You will receive OTP  on mobile or email and enter it

•  Select Your DP type

•  Select pledge request option

•  Select the BO Id and click on it.

Select The stock and place the pledge request.

•   Mark on the OTP box and click submit.

• You will receive a link on you registered mobile no. and email address  which is registered with depository.

•    Enter the OTP received on mobile / email address and confirm the pledge request.

• Once you confirm and pledge request is successfully approved then the margin will available to I investor to use.



Note : Keep in mind that the pledge request OTP confirmation is mandatory to place the request successfully and you should confirm it before 24 hours otherwise it will cancelled automatically.


Benefits Of Margin Pledge

You can take margin against your shares and use it  and do trading.

According to new rule of SEBI  the collateral benefits against the stocks will be available  only if the stocks are pledged mean pledge request successfully approved.

You can sell the stock any time don't need to unpledged it before selling.

The shares will be always remain your account  and just they will be marked as pledged in your demat account to receive margin limits. 

You can take advantage of trading opportunity with available margin don't need to add extra fund for trading.

You will get the benefits of  all the corporate actions  like  dividends,  bonuses ,  right issues even you pledged the stocks.

Investor can unpledge the stock any time there is no margin obligation pending.

What will happen if investor not clear the pledge...?

If a investor use the pledging facilities then if any case he/she fails to clear the margin or not clear the margin then  broker have the rights to sell the shares a available in investor accounts and recover the pledged Margin. And also penalty and charge are applicable to investor for using this pledge facility.

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