Can I pledge my bonds?

1"All G-secs can't be pledged!"

In July 2026 a reader bought 2 government bonds in an RBI auction with a plan: pledge them, and use them as margin for futures and options. Then they tried:

I know that G-sec can be pledged. But I didn't know that all G-secs can't be pledged! Even if they can be part of the approved list - it may take months! I can't pledge these two bonds now.

DM123, TradingQnA, 19th Jul 2026

Another reader explained the catch the next day: the bonds were state development loans, bonds of Tamil Nadu and Punjab, not central government bonds. And a third warned that selling them in a hurry would mean "a deep cut due to illiquidity" (chapter 8).

Pledging is one of the most useful things a bond can do for someone who also trades. Done right, the same money earns a coupon and backs your trades at the same time. Done in a hurry, it leaves you holding a bond you bought for the wrong reason. This page goes through how it works, which bonds count, what you get and what it costs, and what can go wrong.

A pledged bond can earn its coupon and back your trades at once, but only the right bonds qualify. Check before you buy, not after.

2What a pledge is

A pledge is a promise backed by something you own. You tell your broker: "if I cannot pay what I owe on my trades, you may sell this bond." In return the broker lets you trade with margin worth most of the bond's value.

Since August 2020, the bond never leaves your demat account. A lien, a flag saying the bond is spoken for, is marked on it through your depository, and passed on to the clearing house that stands behind every trade. You still own the bond. It still pays you interest, straight to your bank account, just as before. A reader once asked exactly that:

I have pledged GSecs for collateral margin. Will I be eligible for the interest payout receivable from the GSecs on a half-yearly basis after pledging?

Vinod_Lakshmanan, TradingQnA, 2nd Jan 2024

Yes. Nothing about the bond changes except that you cannot sell it until you remove the pledge.

A pledge marks a lien on a bond that stays in your demat. The coupon keeps coming to your bank; you just cannot sell the bond while it is pledged.

3Which bonds count, and why

2 lists decide whether a bond can be pledged, one inside the other:

• The clearing house's list. NSE Clearing accepts central government bonds, Treasury bills and Sovereign Gold Bonds, and treats them as good as cash. It also accepts listed company bonds, but as weaker collateral: it values them cautiously, takes off 15%, and lets them make up only a small share of what each broker deposits.
• Your broker's list. Each broker chooses, bond by bond, what it will accept from you, and publishes the list each month. Zerodha accepts central government bonds, Treasury bills and Sovereign Gold Bonds. It does not accept state development loans or company bonds. Other brokers differ: FYERS, for example, accepts listed company bonds but not state bonds.

That is why "government bonds can be pledged" is only half true. A state bond is a government bond, auctioned by the RBI and held in the same demat account, but it is not on the list. Neither, sometimes, is a brand new central government bond until the broker adds it, which can take time.

TrapIf you are buying a bond in order to pledge it, find that exact bond, by name and ISIN, on your broker's approved list first. A reader did the same thing as DM123 in 2023: "I have brought SDL with better interest rate then G sec, thinking SDL can also be pledge for trading."

The clearing house accepts central government paper as cash and company bonds as weaker collateral; your broker's own list, bond by bond, is what decides. State bonds are not on Zerodha's list.

4What you get for it

You do not get the bond's full value as margin. The broker takes off a safety cushion called a haircut, in case the bond's price falls. For central government paper at Zerodha the haircut is usually 10%, so about ₹90 of margin for every ₹100 of the bond's market value.

The bigger advantage is what kind of margin it is. Exchanges require that at least half the margin for overnight positions be cash or something counted as cash. Pledged shares, however large, count only as the other half. Pledged central government bonds, Treasury bills and Sovereign Gold Bonds count as cash. So someone with pledged shares still needs cash sitting in the account; someone with pledged government bonds may need none.

Expect about ₹90 of margin per ₹100 of central government paper, and that margin counts as cash, which pledged shares never do.

5What the margin can and cannot do

You also need the futures and options segment switched on in your account before you can pledge.

Pledged bond margin backs futures, options and intraday trades. It cannot buy shares to keep or fund margin trading.

6The money working twice

Here is why traders like it, with made up round numbers. Say you hold ₹10 lakh of central government bonds paying about 7% a year. Pledged, they give you about ₹9 lakh of margin that counts as cash. You use it to back futures or option selling.

• Without the bonds, you would park about ₹9 lakh of cash in your trading account to do the same trades. That cash earns nothing there.
• With the bonds, the same trades are backed, and the bonds keep paying about ₹70,000 a year in coupons.

That is the whole attraction: margin you would have to hold anyway starts earning. It is not free money. The bond's price still moves with interest rates (chapter 5), and if it falls, so does your margin, just when your trades may also be losing. A 10 year bond can lose about 7% of its price if rates rise by 1%. Keep some room, not every rupee of margin in use.

Pledged government bonds turn idle margin into margin that earns a coupon. The bond's price still moves, so leave room for a fall.

7What it costs

Because the fee is per request per bond, pledge the full quantity you mean to in one go rather than a little each day. The steps take a few minutes in Kite: Portfolio, then Pledge holdings, pick the bonds and quantity, and confirm with the one time password your depository sends. Requests go through on trading days, and the margin usually appears within minutes.

₹30 plus GST per bond per request to pledge, nothing to remove it, and no interest on the margin itself. Daily charges apply only if you run short of cash or go into debit.

8What can go wrong

The bond can drop off the list. On 30th Sep 2025, after the market closed, a reader found their pledged bonds suddenly unpledged:

some of my GSECs are suddenly showing unpledged leading to reduction in margin available and total funds going negative.

Aditya_Gupta, TradingQnA, 30th Sep 2025

The bonds were 2 very long government bonds, maturing in 2060 and 2061, and they had been removed from the approved list in its monthly review. The list belongs to the broker, and it can change.

Margin falls before maturity. Brokers release pledged government bonds and Treasury bills on their own about 30 days before they mature, and the margin goes with them. Plan for it if you hold short bonds.

Prices and haircuts move. A fall in the bond's price, or a higher haircut, cuts your margin the same day.

The broker can sell. If your trades lose and your account goes into debit, the broker can sell pledged holdings to cover it, only up to the size of the debit, and it decides which holdings to sell. Zerodha says it gives notice first. A bond that hardly trades may sell at a poor price (chapter 8).

Bonds can leave the list, short bonds are released about 30 days before maturity, prices and haircuts can cut margin overnight, and a debit can lead the broker to sell. Keep a cushion.

9Getting them back

Removing a pledge is free. Your margin falls at once, and the bond is free to sell from the next trading day. If you plan to sell a pledged bond, unpledge it first and allow for that day.

Unpledge first, then sell; the bond is free the next trading day and the margin goes immediately.

10Other ways to borrow against a bond

Pledging to a broker only gives trading margin. If you need cash, there are other routes:

• A loan from a bank or finance company. RBI's rules in force from 1st Jul 2026 let banks set their own loan to value for government bonds, lend up to 85% against AAA listed bonds and 75% against AA to BBB, and lend against Sovereign Gold Bonds as they would against gold. Rates and terms vary by lender.
• RBI Retail Direct. Its scheme document says bonds held there "will be available for pledge/lien", but it publishes no procedure, lender list or charges yet. Bonds held in a Retail Direct account cannot be pledged to a broker.

For cash rather than margin, a bank loan against bonds is the route; Retail Direct's pledge facility exists on paper but has no published process yet.

11Before you pledge: a checklist

1. Find the exact bond on your broker's approved list before buying it to pledge.
2. Prefer central government paper: it counts as cash.
3. Know what the margin can do: F&O and intraday, not delivery.
4. Pledge in one request per bond to keep the fee down.
5. Leave a cushion for price falls, haircut changes and list removals.
6. Watch maturity dates: margin goes about 30 days early.
7. Unpledge before you sell.

To DM123: state bonds are not on Zerodha's list, and there is no published timeline for adding a bond. The bonds still pay their coupon every 6 months, so the simplest path is to hold them to maturity, or sell patiently with a limit order (chapter 8), and use central government bonds for pledging next time.

To Vinod_Lakshmanan: yes, a pledged bond keeps paying its coupon to your bank account.

Check the exact bond, prefer central government paper, pledge once, leave a cushion, watch maturity, and unpledge before selling.

Where to find today's figures

Zerodha's approved list today, government paper only

Synced every day from Zerodha's own published list and filtered to central government bonds, Treasury bills and Sovereign Gold Bonds. If a bond is not here, it cannot be pledged at Zerodha today. New marks a bond added in the last 2 weeks. Limit means Zerodha's internal cap for that bond is full, so a fresh pledge request may be rejected until it frees up. Each pledgeable bond also carries a pledge tag on the government bonds and gold bonds pages.

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