How MTF interest is calculated
Funded amount = Position value × (1 − Margin %)
Interest = Funded amount × Daily rate × DaysInterest is charged only on the broker-funded part, every calendar day the position is open, including weekends and holidays.
Worked example
You buy 500 shares at ₹1,000 (₹5 lakh) with 25% margin, so you put in ₹1,25,000 and the broker funds ₹3,75,000. At 0.04% a day for 30 days, interest is ₹4,500. If you sell at ₹1,080, the gross profit is ₹40,000 and the net profit ₹35,500 — a 28.4% return on your ₹1,25,000. Without MTF, the same ₹1,25,000 would have earned 8%.
When MTF makes sense
MTF suits short holding periods with a strong expected move. Held for months, interest of 12–18% a year can eat most of a normal stock's return, and a fall is magnified by the same leverage.
Frequently asked questions
What is MTF (Margin Trading Facility)?
MTF lets you buy approved stocks for delivery by paying only part of the value; your broker funds the rest and charges daily interest on the funded amount until you sell or pay it off.
How much interest do brokers charge on MTF?
Typically 0.03%–0.05% per day (about 11%–18% a year), sometimes tiered by funded amount. Check your broker’s current MTF rate card and enter it here.
Are there other MTF charges?
Usually yes: a pledge/unpledge fee per stock, normal delivery brokerage and statutory charges, and GST on interest at some brokers. Add these in the extra charges field.
Why can MTF returns look so high?
Because your profit is measured against a smaller amount of your own money. Leverage magnifies losses in exactly the same way, and interest is charged whether the trade wins or loses.
Results are estimates for educational purposes only and are not investment, tax or financial advice. Verify figures with your broker or advisor before acting on them.