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How to Pledge Shares in Zerodha?

If you’re a Zerodha user with a portfolio of stocks, ETFs, or certain government securities, you have the opportunity to unlock additional trading capital. Pledging your shares allows you to use them as collateral to obtain margin, expanding your trading opportunities. In this guide, we’ll cover everything you need to know about pledging shares in Zerodha.

How does Share Pledging Work?

Pledging shares means temporarily transferring ownership rights to your broker (Zerodha, in this case) in exchange for a margin. This margin can be used for various trading activities like:



Important Note: Remember, while you technically transfer ownership rights, you still own the shares themselves. If the value of your pledged shares falls, the broker may ask you for additional collateral to maintain minimum margin requirements.

Eligible Securities for Pledging on Zerodha

Not all investments can be pledged. Zerodha provides an up-to-date list of approved securities with their corresponding “haircut” percentages (the percentage deducted from the security’s value to determine your margin). Some common eligible instruments include:



You can find the updated list on Zerodha’s website.

Process of Pledging Shares on Zerodha

Pledging shares in Zerodha is a simple process:

  1. Zerodha Console: Log in to your Zerodha Console account.
  2. Portfolio and Holdings: Navigate to the “Portfolio” section and then to “Holdings.”
  3. Select the Security: Choose the security you want to pledge from your holdings.
  4. Pledge for Margin: Click on “Options” and select “Pledge for margin.”
  5. Quantity: Enter the quantity of shares you want to pledge.
  6. Terms and Conditions: Agree to the terms and conditions of pledging.
  7. Submit: Submit your pledge request.

Authorizing the Pledge on CDSL

After submitting your pledge request on Zerodha, you’ll receive a notification from the Central Depository Services Limited (CDSL). Follow these steps to authorize the pledge:

  1. CDSL Notification: Check your registered email or mobile number for the notification.
  2. CDSL Portal: Log in to the CDSL portal using your PAN details.
  3. Authorization: Select the pledge request and authorize it. You will likely need to generate and enter an OTP for security.

Things to Note:

Using Your Collateral Margin

Once your pledge is successful, you’ll see the additional margin reflected in your Zerodha Kite account under the “Funds” section. Remember these key points:

Additional Considerations & Benefits

Conclusion

Pledging shares can be a strategic tool for traders looking to capitalize on market opportunities. By understanding the process, costs, and associated risks, you can leverage this feature on Zerodha to potentially enhance your trading capabilities. Here’s a quick recap of the advantages and points to consider:

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