India’s MTF book swells to Rs 1.16 lakh crore; PPFAS cautions on leverage and concentration 

Margin Trading Facility (MTF) in India has seen sharp growth, with the total MTF book rising to Rs 1.16 lakh crore as of December 2025. This marks a steep increase from earlier years and reflects a notable shift in investor behaviour towards greater use of leverage in the domestic equity market. The rapid expansion is drawing close attention from market participants, fund houses and observers, given its potential implications for market stability and risk transmission.

PPFAS Asset Management has highlighted the scale of this rise, noting that the MTF book stood at Rs 24,920 crore in FY23. The jump to Rs 1.16 lakh crore in less than three years underscores how quickly margin-funded trading has gained traction among Indian investors. According to the fund house, the pace of growth warrants careful monitoring, particularly due to the increasing concentration of margin trading activity at the broker level.

What is Margin Trading Facility

A Margin Trading Facility allows investors to buy stocks by paying only a portion of the total transaction value, with the broker funding the balance. This structure increases buying power—often up to four times the investor’s capital—and permits longer holding periods of up to 360 days (or T+275 days), unlike intraday trades. While MTFs can enhance portfolio flexibility, they also involve interest costs and significantly magnify downside risk during adverse market movements.

PPFAS MF’s note draws attention to the structural risks associated with this growth, especially the concentration of margin positions among a limited set of brokers. As MTF usage expands, a disproportionate share of leveraged positions is being intermediated by a small number of large brokers. This concentration could pose challenges during periods of market stress, when volatility spikes and liquidity tightens simultaneously.

Growth in MTF book

The MTF book remains heavily skewed towards large, bank-backed brokers, which together account for nearly 50% of the market. Brokers such as Zerodha, Angel One, Motilal Oswal and Bajaj Securities each command around 5–6% market share. The remainder of the MTF book is fragmented across a long tail of smaller brokers, where credit quality, funding access and liquidity buffers may be relatively weaker.

Under prevailing regulations, brokers can fund margin positions through their own capital, borrowings from non-banking financial companies (NBFCs), or by issuing commercial papers. Banks, however, face restrictions imposed by the Reserve Bank of India on margin funding and investments in such instruments, which can constrain their liquidity and funding flexibility. As a result, a broker’s funding mix and cost of capital become critical factors in assessing financial stability, credit risk and resilience during periods of stress.

MTF mechanism

Recent market discussions have also highlighted counterparty risks that brokers may face during sharp corrections or market crashes. Heightened volatility can strain broker funding lines, trigger margin calls, and force the squaring off of leveraged positions. Such dynamics can amplify price swings and elevate counterparty credit risk, particularly if liquidity conditions deteriorate rapidly.

Overall, the sharp rise in India’s MTF book represents a pivotal development in the country’s capital markets. While margin trading has become an increasingly important tool for investors seeking enhanced exposure, the accompanying risks, especially broker concentration, funding vulnerability and leverage amplification, are now firmly in focus. The commentary from PPFAS Asset Management serves as a timely reminder that sustained growth in margin trading must be matched with vigilant risk assessment and robust monitoring to safeguard market stability.