Pay Later (MTF), also known as Margin Trading Facility, is a financial service that allows investors to purchase stocks without needing to pay the full amount upfront. Instead, investors can defer the payment to a later date, making it an attractive option for those who wish to invest but may not have the desired funds available immediately. Bajaj Broking’s Pay Later (MTF) offers a secure and flexible way to increase your buying power by providing the necessary funds to facilitate trades while allowing you to manage your cash flow more effectively.
This facility is popular among traders and investors because it enables them to leverage their capital. By using Pay Later (MTF), investors can make larger trades without having to pay the entire cost right away. It works by allowing you to borrow funds from Bajaj Broking to cover the portion of the stock purchase that exceeds your available funds. You can then repay this borrowed amount at a later date, along with a small interest fee.
For instance, with Bajaj Broking’s Pay Later (MTF), you can conduct trades up to four times the amount of your available capital. So, if you have a limited amount of money but wish to make a more substantial investment, MTF gives you the additional financial support needed to make the purchase. You are then required to repay the borrowed portion within a specific period, making this a highly convenient tool for investors who want to take advantage of market opportunities without waiting to accumulate the full amount needed for a trade.
In summary, Bajaj Broking’s Pay Later (MTF) helps investors by offering them the ability to make bigger investments, manage payments efficiently, and gain greater buying power. It offers the advantage of leveraging your investments and potentially maximising your buying power, while also providing the convenience of not having to pay the full cost of your trades immediately.
Easy steps to avail Pay Later (MTF)
To avail of the Pay Later (MTF), follow these straightforward steps:
Log in: Open the Bajaj Broking Mobile App and log in to your account.
Select stocks: Choose the stocks you want to trade from your preferred list.
Initiate purchase: Click on the ‘Buy’ option for the selected stocks.
Enter details: Input the quantity of stocks you wish to purchase and select ‘MTF’ as the product type.
Confirm: Click on ‘Confirm Buy’ to finalise the purchase.
Pledge stocks: Ensure you pledge your MTF stocks before 9 PM on the day of purchase to complete the process.
What is the Pay Later (MTF) Pledge
The Margin Pledge is a mandatory requirement introduced by SEBI for those using the Margin Trading Facility. This pledge involves committing to secure the shares purchased under the Pay Later (MTF) scheme by pledging them. This process is essential as it guarantees that the shares you buy are held as collateral to maintain your trading position.
Here is how to complete the Margin Pledge:
Await notification: After Pay Later (MTF) approval, you will receive an Email/SMS notification prompting you to initiate the pledge.
Access CDSL: Click the CDSL link provided in the Email/SMS, which will redirect you to the CDSL website.
Enter details: Provide your PAN or Demat Account details on the CDSL platform.
Select stocks: Choose the stocks you wish to pledge.
Generate OTP: Request a one-time password (OTP) for authentication.
Authenticate: Enter the received OTP to authorise and complete the pledge process.
It is crucial to complete this pledge on the same day you purchase the shares. Failure to do so will result in the forced square-off of your shares after seven days from the transaction date (T+7 days). This process ensures that both the investor and broker adhere to the terms of the margin facility, maintaining the integrity and proper settlement of transactions.
Important considerations for using Pay Later (MTF)
Utilising the Pay Later (MTF) can offer significant advantages, but it is crucial to adhere to the guidelines and understand the implications:
Timely pledge: Remember to pledge your shares purchased under Pay Later (MTF) before 9:00 PM on the day of purchase. This step is vital to secure your position and comply with regulations.
Trade wisely: Opt for Pay Later (MTF) only after thorough research and consideration. Ensure that the trade aligns with your investment strategy and risk tolerance to make the most of this facility.
Manage margin shortfall: Do not ignore any margin shortfall. If a shortfall occurs, be aware that your shares will be squared off 4 trading days after the shortfall has been identified.
Understand interest charges: Remember that Pay Later (MTF) functions like a loan. Interest is charged on the borrowed amount, so it is important to factor this into your investment decisions. Managing these costs effectively will help you optimise your overall trading strategy.
By following these guidelines, you can effectively use the Pay Later (MTF) to enhance your trading strategy while managing risks and costs.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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