If you have purchased a few shares after selling your position on the same day, then in the absence of adequate funds, your broker might ask you to pledge shares.
They will initiate a request to pledge shares or provide adequate funds.
You will receive a link from the depositories (CDSL/NSDL) to authenticate the request on your registered email ID and SMS on the transaction day, which will be valid till a certain time limit of the transaction day. You will also get follow-up messages and emails from your broker.
You will have two options, either you authorise to increase your margin by pledging shares or pay full purchase amount by 10:30 AM on T+2 day to continue holding your position. T+2 days means 2 working days from the transaction date.
Also Read: How clearing and settlement takes place in the Stock Market
If you fail to do so you can still pay up to T+6 day. However, in this case you will incur late payment charges.
If you fail to pledge or pay the full purchase amount, then your position will be sold off. This means, you will not be allowed to hold your position beyond T+7 days. After pledging your shares you can hold it for a longer period of time.
To authenticate to pledge shares, you need to click on the link received from CDSL/NSDL and then enter your PAN to authenticate the transaction by using OTP.
On successful validation pledge will be created and the broker will intimate you by email and notification on T+2 day after receiving payout from the exchange.
Remember, you will be charged DP charges for pledge request and unpledge request, which varies from broker to broker.
Interest will be charged on a daily basis on the borrowed amount after 2 working days from the transaction day. The actual interest amount will be debited from your balance, and will be posted to your ledger on a fortnightly basis.
If at a later point of time, you have adequate funds and you want unpledge shares, then you can do so. As discussed above, DP charges will be incurred by you.
In absence of adequate funds, you can even pledge your existing shares in order to increase your margin limit, which ultimately increases your buying power.
You need to follow the same process to pledge your shares.
This process will be followed when you haven’t submitted your POA to the stock broker.
If you have created a pledge on your shares, then in absence of adequate funds to support your margin limit, your stock broker has the right to sell pledged shares.
