India’s margin trading facility has expanded rapidly over recent years, reaching ₹1.42 lakh crore in August 2026, driven by increased retail participation and greater broker offerings. Experts warn of the amplified risks associated with leverage, especially in volatile stocks and for less experienced investors.
India’s margin trading facility has expanded sharply in recent years, with the country’s MTF book reaching about ₹1.42 lakh crore in early August 2026, according to Business Standard. That is a steep rise from ₹24,920 crore in FY23 and reflects a surge in retail participation, more brokers offering the product and greater familiarity among investors, says Tejas Khoday, co-founder and chief executive of FYERS. Shrey Jain, chief executive of SAS Online, told the newspaper that the MTF book has grown five to six times in roughly three years.
Even after that growth, the Indian market remains small beside the United States, where margin debt is above $1.5 trillion, Khoday noted. The basic structure of MTF is straightforward: an investor pays only part of the purchase price while the broker funds the rest, usually against a margin of around 25% or more depending on the stock, Jain said. The shares bought through the facility are pledged as collateral and the broker charges interest daily on the funded amount until the debt is repaid or the position is sold.
The appeal of the product is clear. MTF allows investors to take delivery of shares without funding the full trade upfront and gives them leverage in the cash market, Khoday said. Jain added that it can be quicker to access than a bank loan against securities. But the same leverage can magnify losses as well as gains, especially when markets turn suddenly. If the value of pledged shares falls and the margin available in the account drops below the broker’s requirement, investors must add funds within the broker’s deadline or face liquidation, Trivesh D, chief operating officer of Tradejini, said.
That risk is higher in smallcap and midcap stocks, which often become more volatile in periods of stress, and in stocks outside the futures and options segment, which are usually less liquid. Jain said thin trading can worsen losses if a broker has to sell positions quickly. Costs also add up: interest on the funded amount is typically charged every day, alongside brokerage, statutory levies, pledge-related fees and any penal charges for shortfalls. Vikas Singhania, chief executive of TradeSmart, said the main expense is the interest bill, which grows with time and raises the price at which an investor must exit profitably.
For that reason, experts say MTF is best suited to experienced investors who understand leverage, have a clear exit plan and can keep enough cash ready to meet margin calls. Khoday said the facility works best when used selectively. Investors with uncertain cash flows, limited experience or no ability to arrange funds quickly should stay away, particularly if they intend to hold positions for long periods, when interest costs can eat into returns and make recovery from losses much harder.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
