Loan Against Shares vs. Margin Trading Facility

Margin Trading Facility (MTF):

Margin Trading Facility or MTF is a facility offered to traders where they can access more funds to trade in shares or securities by paying only a small fraction of the total transaction value. This fraction is known as margin. Margin can be in the form of cash or shares as collateral. The remaining find is added by the broker as a limit or loan with an interest payable for the loan. 

Loan Against Shares (LAS)

Loan against shares is a facility where an investor can take a loan against their listed investment holdings e.g. shares, bonds, mutual funds etc. The shares are lien marked by the intermediary and an interest is charged on the loan amount on monthly basis. The interest is calculated on the amount withdrawn from the loan account and for the time the fund is taken. Investors can use LAS facility when they require cash, but do not want to liquidate their investments. 

Let’s look at a comparison between LAS and MTF:

Loan Against SharesMTF(Pay Later)
Interest RateUp to 11 – 13%3.99 % – 9 %
Processing Fees0.5 to 1%NIL
Max Funding20 LacsNo Limit

Cost of borrowing:

LAS loan interest is usually lower than personal loans and credit card loans since it is a collateralised loan. MTF interest rates vary depending on the broker or intermediary. 

Did you know AsthaTrade offers 

  • Up to 4x margin on equity for 365 days.

For example: If you buy TCS worth Rs 1,00,000, it will command a margin of Rs.25,000 subject to terms and conditions.

How is Astha Trade MTF offering better than LAS from banks/NBFCs?

  • Lowest Interest Rate in the market. 3.99% per annum for clients who have subscribed by paying a subscription fee of INR 6000 per year(For more details refer section below). For others the interest rate is as per the MTF form or mutually agreed.
  • You can transfer and pledge your shares to Astha to get the LAS Benefit.
  • You pay lower interest compared to LAS interest rates.
  • You can earn better returns on your trades with higher capital and liquidity and low borrowing cost.
  • Your net return is better due to lower cost of borrowing. 
  • The process is simple and online and does not require tedious documentation.

Click here for more information about Astha Margin Trade Facility.

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