What does MTF interest add up to over a year?
0.05% a day sounds small, but it is about 18.25% a year: ₹18,250 on every ₹1,00,000 you borrow.
₹1,00,000 borrowed at 0.05% a day
| 30 days | ₹1,500 |
|---|---|
| 90 days | ₹4,500 |
| 180 days | ₹9,000 |
| 365 days | ₹18,250 |
An example rate, not any one broker’s. Interest only: brokerage, pledge and DP charges come on top.
What does 0.05% a day come to in a year?
About 18.25%. Multiply the daily rate by 365.
A small daily number hides how large the yearly cost is. That is why comparing rates means putting them on the same footing.
| Rate | 30 days | 90 days | 180 days | 365 days |
|---|---|---|---|---|
| 0.03% a day | ₹900 | ₹2,700 | ₹5,400 | ₹10,950 |
| 0.04% a day | ₹1,200 | ₹3,600 | ₹7,200 | ₹14,600 |
| 0.05% a day | ₹1,500 | ₹4,500 | ₹9,000 | ₹18,250 |
Interest on ₹1,00,000 borrowed. Weekends and holidays count where the broker charges by calendar day.
Why does holding for a long time cost so much?
At 0.05% a day, a year of interest on ₹1,00,000 is ₹18,250. The ₹1,33,333 of shares must rise about 13.7% just to cover it.
That is before brokerage and other fees. It is also why MTF is usually described as a short-term tool. The longer you hold, the more the shares must rise before you make anything.
What rates do brokers actually charge?
It varies by broker, by amount borrowed and sometimes by paid plan, so check for your own amount.
Our cost calculator works out the rupee cost at 14 brokers for your amount and days, and each broker page links to the broker’s own rate.
Sources: our broker comparison
How is the interest worked out and charged?
Daily, on the money the broker lent you, until you sell or repay.
The start day and how it is billed differ by broker. See how MTF interest is charged for the details.
Sources: our broker comparison