Collateral & Usage

Collateral margin refers to the margin funds that are made available to you based on the securities you have pledged from your demat account, such as stocks, ETFs, mutual funds, or bonds, instead of using cash.

Alice Blue permits the pledging of approved equities, ETFs, and mutual funds to obtain collateral margin. Clients are required to maintain a cash component while utilizing collateral margin. Haircuts are applied based on the asset’s risk (Value at Risk, or VaR), and margin is granted accordingly by Alice Blue Financial Services.

Yes, the client can use collateral margin for all segments; however, the client cannot use the collateral for purchasing new stocks.

Collateral value depends on the stock’s Value at Risk (VaR IN %), applicable haircuts, and the eligible value of the pledged shares.

Example:
Suppose you pledge 100 shares of Reliance Industries Limited at ₹2,085 per share, and the VaR is 18.70%.
Market value: 100 × ₹2,085 = ₹2,08,500
VaR deduction: ₹2,085 × 18.70% = ₹389.90 per share
Collateral value per share: ₹2,085 − ₹389.90 = ₹1,695.10
Total collateral value: 100 × ₹1,695.10 = ₹1,69,510

The calculated collateral value is ₹1,69,510, subject to applicable valuation rules and other charges or haircuts.

50:50 Cash Component Requirement:
As per the applicable margin framework, at least 50% of the total margin requirement must be maintained in cash or cash equivalents. The remaining portion required to be maintained through eligible non-cash collateral, subject to applicable rules.
If the required cash component is not maintained, interest will be charged on the shortfall at the applicable rate.

How can I check the VaR percentage of a stock?
• Visit the NSE India website at https://www.nseindia.com.
• Search for the company or stock.
• Navigate to the relevant market information and locate the VaR IN % value, where available.

Note: The collateral value calculated above does not automatically mean that the entire amount can be used without maintaining the required cash component. The applicable margin requirement and any cash shortfall must be considered separately.

As per SEBI’s margin framework, clients must maintain a minimum of 50% of their total margin requirement in cash or cash-equivalent assets. The remaining maximum 50% can be maintained through non-cash collateral, such as pledged securities.

Alice Blue charges interest at the rate of:

• Annual interest rate: 12% per annum.
• Daily interest rate: 0.0342% per day.

The charges apply to the cash shortfall funded by Alice Blue.

Interest will be charged only on the cash shortfall funded by Alice Blue, based on the End-of-Day (EOD) margin utilisation and applicable cash component requirement.

Interest is calculated daily at 0.0342% on the applicable funded cash shortfall amount. 

The calculated interest charges will be posted to your Alice Blue trading ledger.

Alice Blue calculates interest only on the End-of-Day (EOD) margin shortfall, not on peak margin utilisation during the trading day.

In this example, you have maintained only ₹1,50,000 against the required cash component of ₹2,50,000. 

Therefore, Alice Blue will fund the shortfall of ₹1,00,000, and interest will be charged only on this funded amount based on EOD margin utilisation. 

Daily interest is calculated using the following formula:

Daily Interest = Cash Shortfall × 0.0342%

For example, if the EOD cash shortfall is ₹1,00,000:

₹1,00,000 × 0.0342% = ₹34.20 per day.

Therefore, the applicable daily interest will be ₹34.20.

If the cash shortfall remains ₹1,00,000 for 30 days:

₹1,00,000 × 0.0342% × 30 = ₹1,026.

The total interest will be ₹1,026, assuming the shortfall remains unchanged throughout the 30-day period.

Yes. Interest is calculated daily based on the applicable EOD cash shortfall. Therefore, the interest amount may vary depending on the daily shortfall.

To avoid interest charges, you should:

1. Maintain at least 50% of your total margin requirement in cash or approved cash-equivalent assets.
2. Monitor your margin utilisation regularly.
3. Ensure sufficient cash balance in your trading account.

You can monitor your margin utilisation and available margin through the following:
• Margin Statement.
• RMS Reports.
• Alice Blue trading platform.

The following are considered for meeting the required cash component:
• Ledger credit balance.
• Approved cash-equivalent collateral, such as Liquid Bees and Liquid Mutual Funds.

No. You can fulfil a maximum of 50% of your total margin requirement using non-cash collateral, such as pledged securities. The remaining minimum 50% must be maintained in cash or approved cash-equivalent assets. 

Yes. You can use a combination of cash, approved cash-equivalent collateral and pledged securities, provided that at least 50% of your total margin requirement is maintained in cash or cash equivalents.