Bank and Financial Institutions require customers to first purchase shares using their own funds before availing margin lending facilities. In other words, customers must manage the full investment amount upfront and buy the shares. Only after the shares are credited to their account can they be pledged as collateral to the bank, upon which the customer receives the margin lending amount. In contrast, under the Margin Trading Facility provided by brokers, customers are required to maintain only 30% initial margin, and brokers provide up to 70% funding upfront. This allows customers to purchase shares immediately, subject to applicable interest and service charges on the funded amount. Furthermore, Bank and Financial Institutions provide up to 70% margin lending based on either the 180-day average price or the Last Transaction Price (LTP), whichever is lower. However, in the Margin Trading Facility offered by brokers, the margin is calculated based on the Last Transaction Price (LTP).
