As per RBI regulations, borrowers availing a loan against securities from an NBFC must maintain the prescribed LTV limit. At Zerodha Capital the maximum permitted LTV at disbursal is 45%, but market movements can temporarily push it above that level. Once it crosses the permitted limit of 50%, it has to be brought back down.
Two ways to fix it
- Pledge additional securities, which increases your collateral value.
- Repay part of the outstanding principal, which reduces your loan amount.
Both actions lower the LTV ratio.
How long you get
| LTV level | Time to bring the LTV back within the limit |
|---|---|
| LTV up to 60% | Notice day + 6 days |
| LTV above 60% | On the notice day itself, by 7 PM |
How you will be notified
If the LTV rises above the permitted limit, Zerodha Capital notifies you through email, SMS and automated voice calls. Acting promptly on the notice brings the LTV back below the threshold.
If the LTV is not brought down
If the ratio is not brought back within the permitted limit, Zerodha Capital may invoke the pledge and sell the pledged securities, partly or fully, to recover the shortfall. Confiscation charges apply as per the charges list when this happens.
Securities are sold only to the extent required to bring the outstanding loan back within the permitted LTV limit, and only after multiple reminders and notifications.