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Market Intelligence › Basic Terminologies
How the Margin Trading Facility works, its interest, and its risk
Published by The Retail Trader · JUL 25, 2026 · Order Flow
MTF is a facility in which your broker lends you money so that you can take delivery without paying the full amount. It is different from intraday leverage, because the position can stay open for many days.
You put in a part and the broker funds the rest. The shares you buy become the collateral, and they stay pledged.
Interest is charged on that borrowing every day. This interest keeps running for the whole duration of the position, no matter what the price does.
Two risks run together, and that is the real point:
• When the price falls, the value of the collateral falls and a margin call can come.
• If you do not meet the margin, the broker can sell the position on its own, and that often happens at the worst price.
• The interest cost grows over time — a long holding becomes expensive.
• Not every stock is eligible for MTF, and the list keeps changing.
The maths of MTF works only when your expected return is clearly higher than the interest and the horizon is short. Borrowing to take delivery for a long-term view is often a slow, certain cost — and that cost is incurred even when the view turns out to be right.
This article is educational only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.