When you want to buy more shares than your available money allows, the Margin Trading Facility (MTF) can help you. It lets you borrow money from your stock Motilal Oswal to buy stocks by paying only a part of the total amount.

This is useful for traders and investors who want to take bigger positions without using all their own money.

What is MTF?

MTF stands for Margin Trading Facility. It is a service provided by stockbrokers where you can buy shares by paying only a part of the total amount. The remaining money is lent to you by the broker.

You pay some interest on the borrowed amount, and you must return it within a time period. MTF is mainly used for short- to medium-term investment.

How Does MTF Work?

Let’s say:

• You have ₹25,000

• You want to buy shares worth ₹1,00,000

• Your broker gives 4x margin through MTF

That means, you can buy ₹1,00,000 worth of shares by using your ₹25,000. Motilal Oswal gives you the rest ₹75,000.

You must keep the required margin in your account and pay interest to Motilal Oswal on the borrowed money till you square off or sell the shares.

Key Features of MTF

• Leverage: Buy more with less money (usually 2x to 5x margin)

• Interest: Pay interest only on the borrowed amount

• Pledged Shares: Shares are held as security with the broker

• SEBI-Regulated: MTF rules and eligibility are set by SEBI

• Time Limit: Some brokers offer flexible repayment, while others set a fixed period

Who Can Use MTF?

• Investors with a demat and trading account

• Must sign the MTF agreement with the broker

• Need to maintain the required margin amount

Benefits of MTF

• Higher buying power without needing full cash

• Easy access through Motilal Oswal’s platform

• Can hold shares for more days compared to intraday

• Good for short-term opportunities

Risks of MTF

• You pay interest on borrowed funds

• If the stock price falls, the broker can sell your shares to recover money (called a margin call)

• Losses can become bigger because of leverage

Example of MTF

You want to buy 100 shares of a company at ₹1,000 each (₹1,00,000 total).

• With ₹25,000 in hand and 4x MTF, Motilal Oswal funds the rest of ₹75,000.

• You hold the shares and pay interest to Motilal Oswal (e.g., 18% per year on ₹75,000).

• If the share price goes up to ₹1,100, you sell and make a profit after paying interest.

• If the share price falls, Motilal Oswal may ask you to add more money or sell your shares (margin call).

MTF vs Intraday

Final Words

MTF is a powerful tool for active investors and traders who want to increase their buying capacity. But it also comes with risks. You should understand your risk appetite and market conditions before using MTF.

Platforms like Motilal Oswal offer a seamless Margin Trading Facility with competitive interest rates, smart tracking tools, and support. Always read the terms and plan your trades carefully to make the most of MTF.

Explore more: Understanding risk tolerance while investing in markets | What is Pay later (MTF)? | Pay later, Trade now: A smarter way to invest