Pledge Shares is a facility where you can pledge your existing stocks (from the approved list of securities) with the broker. In return, the broker will give you capital or margin to trade in the stock market, after deducting haircut (Every stock has a pre-decided haircut percentage as per the broker’s internal Risk Management policy).
For example: Suppose you want to buy shares worth ₹1 lakh. But you do not have sufficient capital. However, you do have shares (free Demat holdings) worth ₹1.25 lakh in your Demat a/c. You can pledge these stocks with your broker and get funds. Assuming all your stock holdings are approved for pledging and it has a haircut of 20%, you will receive a margin of ₹1 lakh.
Was this article helpful?
That’s Great!
Thank you for your feedback
Sorry! We couldn't be helpful
Thank you for your feedback
Feedback sent
We appreciate your effort and will try to fix the article