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Margin trading can increase your buying power, but the extra money comes at a price. When a broker funds part of your stock purchase, you pay interest on the amount borrowed. That cost can be easy to overlook when you are focused on the potential return from the trade.
The MTF rates will differ across brokers too. Some offer a daily rate, while others might have a different pricing model. When evaluating platforms in 2026, check factors like brokerage, pledge charges, and the amount you borrow along with interest rates.
What Is MTF Interest?
A margin trading facility allows eligible investors to buy certain shares by paying only part of the purchase value themselves. The broker finances the remaining amount and charges interest for the period that the funds remain outstanding.
Suppose you want to buy shares worth ₹1,00,000 and pay ₹25,000 from your own funds. If the broker finances ₹75,000, the interest is calculated on that ₹75,000.
The longer you keep the position, the more interest accumulates. This makes the cost particularly important if you plan to hold an MTF position for several weeks or longer.
How Is the Interest Calculated?
Most brokers calculate MTF interest daily. The exact method and rate depend on the broker’s terms.
For example, if ₹75,000 is funded at 0.04% per day, the interest would be approximately ₹30 per day. Holding the position for 30 days would therefore cost around ₹900 in interest, before other applicable charges.
The calculation is simple, but the important point is that the charge continues for as long as the funded amount remains outstanding.
MTF Interest Rates Across Major Indian Brokers in 2026
No standard MTF interest rate applies to every Indian broker. Rates can differ by broker, plan, funded amount, and other terms.
Some brokers quote their rates as an annual percentage, while others prominently display a daily rate. A daily figure can look small, so it is worth converting it into an annual equivalent when comparing different platforms.
| Broker | MTF Interest Rates |
| HDFC Sky | 0.033% per day (approx 12% p.a.) |
| Groww | 0.041% per day (approx. 14.95% p.a.) |
| Zerodha | 0.04% per day (approx. 12. 14% p.a.) |
| Angel One | 0.041% per day (approx. 14.99% p.a.) |
| Upstox | ₹20 per day for every ₹40,000 borrowed |
| ICICI Direct | 0.0265% to 0.049% per day (approx. 9.65% to 17.99% p.a.) |
| Dhan | 0.0342% per day (approx. 12.49% p.a.) |
Why the Lowest Rate May Not Be the Cheapest
A lower interest rate looks attractive, but it doesn’t tell you the full cost. Consider two brokers. One charges a lower interest rate but has higher brokerage and pledge charges. Another charges slightly more interest but has lower transaction costs. Depending on the size and duration of your trade, the second option could work out cheaper.
The amount you borrow matters too. If you use more leverage, the interest charged on the funded portion will increase even when the interest rate stays the same. This is why it makes more sense to compare the total cost of the trade rather than choosing a broker based on one number.
What Can Affect Your MTF Cost?
Several factors determine how much you eventually pay.
- Amount funded: Interest is charged on the amount the broker finances. Borrowing more means paying more interest.
- Holding period: Since interest is generally calculated daily, keeping a position open for longer increases the total financing cost.
- Brokerage: Depending on the broker and plan, brokerage may apply when you buy or sell the security.
- Pledge-related charges: Shares bought through MTF are generally pledged as collateral, and applicable pledge or unpledge charges may add to the cost.
- Margin requirements: The amount you need to contribute yourself can vary depending on the security and applicable requirements.
Consider these costs before entering the trade, not after the position has already been opened.
Checking MTF Costs Before You Trade
Most brokers now provide information about their MTF rates and charges through their websites and platforms. A margin trading app can also make it easier to check eligible securities, view available funding, and monitor open positions.
Before placing an order, look at:
- The current interest rate
- How often interest is calculated
- Brokerage charges
- Pledge and unpledge charges
- The required margin
- What happens if your margin falls below the required level
The last point is particularly important. If a leveraged position moves against you and your available margin falls short, you may need to add funds or securities. If you don’t address the shortfall, the broker may act under the applicable terms.
How Interest Affects Your Returns
MTF changes how your actual return is calculated. Suppose you make ₹5,000 from a trade but spend ₹1,000 on interest and other charges. Your gross profit may be ₹5,000, but your return after costs is lower.
This becomes more noticeable when a stock moves only slightly or stays flat for a long period. The financing cost continues even when the share price isn’t moving much.
That is why MTF generally makes more sense when the expected return justifies the borrowing cost. A trade should not be evaluated only on where you expect the share price to go.
Is MTF Suitable for Every Investor?
Not necessarily.
MTF can be useful for investors who understand leverage and are comfortable managing the additional risk. But it is not simply a way to make “extra money” on your investment.
A decline in the stock can increase your loss relative to the money you originally contributed. You also remain responsible for the funded amount and applicable interest.
Before using MTF, consider whether you can manage the position if the stock moves sharply against you.
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