When trading in Margin Trading Facility (MTF), interest of 0.0438% per day is charged on the funded amount (negative MTF ledger) starting from the settlement date of the purchase. This interest is calculated from the day after the settlement of the purchase (T+1) until the day before the actual funds are received.
Here’s how the process works:
Purchase: When you buy shares using MTF, your funded amount for a specific stock is transferred to the MTF ledger on the settlement day. However, the margin is blocked on the buy day.
Sale: Upon selling MTF shares, your funded amount for a specific stock is transferred from the MTF ledger back to your regular ledger on the settlement day. However, the margin is released on the sell day.
Interest Calculation:
When you sell your MTF shares, your margin value for a specific stock will no longer be in the MTF ledger on the day of the sale.
As a result, interest will be calculated on the full amount in the MTF ledger on the sell date till the actual fund realisation.
Let's take an example where you bought shares on Monday for Rs. 100,000 (with 75% MTF funding) and sold them on Thursday. The Buy settlement will happen on Tuesday, so that is when the interest period starts, while the Sell settlement happens on Friday, but that is not counted for interest since the money is received that day.
- Your fund: 25,000
- Dhan funded value: 75,000
- Total number of days: 3 (Tuesday to Thursday)
- Interest on the funded amount before the sell date: Rs. 65.70 (calculated as Rs. 75,000 * 0.0438% * 2 days)
- Interest on the total MTF ledger from the sell date (since the funded amount has been moved to Regular): Rs. 43.80 (calculated as Rs. 100,000 * 0.0438% * 1 day)
Note: If MTF shares are sold on a Friday, the settlement will happen on the following Monday. This means interest will be charged on the total value until Sunday.