Just wants to understand if there are no funds/cash available in my account i.e zero but have huge portfolio of mutual funds can i pldege all my mutual funds. And wants to buy equities If yes what would be daily charges incurred or any penalties… Or if can’t pledge my mutual funds with zero cash balalnce in my account so in that scenario how much funds needs to be added in my account or mainatain so that there are no penalty or charges incurred
Hi @NAVED_34601497,
Yes, you can pledge your mutual funds on Upstox even if your cash balance is zero. The collateral received can be used across multiple segments - Equity Delivery, Equity Intraday, F&O buying, and F&O selling.
For F&O trading, the exchange requires a 50:50 cash-to-collateral ratio. However, Upstox provides the facility to use collateral even if you have less cash. The remaining amount is funded by Upstox and a daily interest of 0.05% per day is applied on the amount that is funded by Upstox.
You can read about it here: - Help Center
For equity delivery, you can also use collateral to buy stocks. You’re allowed to purchase up to the value of cash + collateral and the transaction is billed in your ledger at the end of the trading day. If you don’t have enough cash to cover the full amount, your account may go into a debit balance. You’ll get a 5-day window to clear dues, during which a Delayed Payment Charge (DPC) of 0.05% per day applies on the outstanding amount.
You can read about it here: Help Center
Hope this clarifies your doubt. Let us know if you require more help.
Let’s try to understand with an eg.
Account Balalnace 0
Mutual Fund Pledge received 5,00,000
Account Balalnace is now 5,00,0000
Now I buy stocks of Rs 5,00,000 for deliveries long term.
Now account balance is 0 again as I have use total amount of pledge mutual which I received.
In the above scenario what are the charges or penalty I will received on daily basis
Hi @NAVED_34601497,
Sure, let’s take your example.
Day 1 - Cash = 0 / Collateral = 0
You pledge mutual funds and receive ₹5 lakhs (post haircut) within minutes.
Now it will be:
Day 1 - Cash =0 / Collateral = 5 Lakhs
You now purchase stocks worth ₹5,00,000 for delivery.
Day 1 - Cash = 0 / Available Collateral = 0 / Margin Used = 5 Lakhs
At the end of the day, when the trade is settled and the ledger is updated with the transaction bill, your stock purchased is billed.
Day 1 EOD or Day 2 morning - Cash = - 5 Lakhs / Collateral = 5 Lakhs
Now, your stocks transaction is complete. Your pledged collateral is freed up again and you can reuse it for further trades. Post this, daily DPC of 0.05% will be charged on debit amount of 5 Lakhs which is Rs 250. You can choose to clear the debit in the next 5 days.
Hope this clears things up.
Thank you
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