What are Nithin Kamath's concerns about India's MTF?

Nithin Kamath is concerned about the complex risk management of MTF and the potential for synchronized liquidations during market downturns due to the swelling Rs 1.16 trillion loan book.

How large is the Margin Trading Facility loan book in India?

As of January 19, 2026, India's MTF loan book had reached a record Rs 1.16 trillion.

Why is MTF considered riskier than derivatives by Zerodha?

MTF is riskier because clients can hold leveraged positions for months in many stocks, including illiquid ones, increasing complexity and risk during market corrections.

Home / Business and Economy / Zerodha Warns: MTF Boom Risks Market Mayhem

Zerodha Warns: MTF Boom Risks Market Mayhem

22 Jan

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Summary

MTF loan book reached Rs 1.16 trillion, up 50% year-on-year.
Risk management in MTF is more complex than derivatives trading.
Regulatory safeguards protect the system, not brokers from defaults.

Zerodha Warns: MTF Boom Risks Market Mayhem

The outstanding Margin Trading Facility (MTF) loan book in India has surged to a record Rs 1.16 trillion as of January 19, 2026, marking a nearly 50% increase year-on-year. This significant growth is driven by stockbrokers seeking alternative revenue streams amid regulatory tightening on derivatives. Zerodha founder Nithin Kamath has highlighted the heightened risks associated with MTF, particularly its complexity compared to futures and options trading.

Kamath explained that clients can hold leveraged positions for extended periods in over 1,300 stocks, including illiquid ones. This contrasts with derivatives, where positions are typically shorter-term. He cautioned that a sharp market correction could trigger widespread, synchronized liquidations, especially in non-derivatives stocks where liquidity dries up during downturns. Layered leverage, where a small initial investment can control a much larger position, further amplifies potential losses.