Takeaway Points:

• The RBI cut the repo rate by a cumulative 125 basis points through 2025, bringing it from 6.50% to 5.25%, and has held it there through mid-2026.
• Systematic reduction in rates tends to reduce costs of broker funding in the long run, which impacts your cost of maintaining mtf positions.
• Margin trading is best utilized for shorter periods rather than for long-term holdings due to interest that accrues daily.
• A friendlier rate environment lowers the cost side of mtf, but it does not reduce leverage risk or the chance of a margin call.
• mastertrust offers up to 4x leverage on 1000+ approved stocks under mtf, alongside flat ₹20 per order pricing on intraday, F&O, and equity.

How RBI Rate Cuts Are Making Margin Trading More Attractive for Stock Investors in 2026

If you've been thinking about using leverage to grow your stock portfolio, this is a good time to look at the numbers again. The MTF stock market in India has quietly turned cheaper over the past year, and it isn't a coincidence. 

The Reserve Bank of India spent 2025 cutting rates aggressively, and that easing cycle is still shaping what you pay to borrow today.This blog breaks down what changed, why it matters for anyone using margin trading, and what to actually check before you fund a position through MTF.

What Is MTF (Margin Trading Facility)?

Margin Trading Facility, or MTF, lets you buy stocks by paying only part of the trade value upfront. Your broker funds the rest, and you pay interest on that funded amount until you repay it or close the position. It's a SEBI-regulated form of margin trading available only on an approved list of liquid stocks, so you can't use it on penny stocks or illiquid counters.

With mtf, the shares you buy are pledged as collateral in your demat account. You still own them, but the broker holds a claim on them until the funded portion is cleared. This is different from intraday margin, because mtf positions can be carried forward instead of squared off the same day.

How RBI Rate Cuts Changed the Cost of Margin Trading

Here's the part that directly affects your mtf stock market strategy. Through 2025, the RBI cut the repo rate four times, taking it from 6.50% in January down to 5.25% by December, a cumulative reduction of 125 basis points across the February, April, June, and December meetings. Since February 2025, the RBI has cut rates by a cumulative 125 basis points, its most aggressive easing cycle since 2019. 

Through the first half of 2026, the central bank has paused at that level. The RBI kept the repo rate unchanged at 5.25 percent in its February, April and June 2026 MPC meetings, signalling a pause after the rate cuts announced in 2025, while keeping a neutral stance.Why is this relevant for margin trading? The funding of your margin trading facilities is done from the borrowed funds of the brokers themselves, and the rates on those borrowings depend upon the general interest rate regime. Whenever the RBI’s policy rate falls more than a percent within one year, there will be a decline in the funding costs as well. 

It becomes very important for leveraged short- to medium-term traders as the interest expense affects their bottom line.This is in contrast to the time two years ago, when the repo rate stood at 6.50% for eleven consecutive times. Each rupee loaned out via MTF had more weightage on account of its cost. A lower system rate does not guarantee an overnight reduction by each and every broker, but the trend has remained positive in the MTF Stock Market in 2025 and 2026.

H2:Why Margin Trading Looks More Attractive Right Now

A few practical reasons this matters for active investors:

• Lower carrying cost on positions held beyond a day. MTF interest accrues daily, so even a small drop in your funding rate adds up over a multi-week swing trade.
• More room for the trade to work. With borrowing costs easing, the price move you need before MTF starts paying for itself is smaller than it was in the higher-rate environment of 2023-24.
• Stable EMI and lending conditions. With the RBI holding rates through early 2026 after last year's cuts, borrowers and MTF users get predictability instead of a rate that keeps shifting under them.

None of this eliminates the fundamental danger of trading on margin. The effects of leverage increase your profits in the same way that they increase your losses, and a reduced interest rate will not shield you against being wrong about which way the market will move.

Common Doubts Investors Have About MTF

Does a repo rate cut mean my MTF interest rate drops automatically?

Not right away. The brokers will have their own MTF rates that are updated with some delay as their own funding costs change. Please make sure to always check your broker’s current rate.

Is margin trading suitable for long-term investing?

Generally not. Daily interest accrual on MTF makes it more suited to short- and medium-term, high-conviction trades than to a buy-and-hold approach.

What happens if my pledged stock falls in value?

You could face a margin call, meaning you'll need to add funds or securities to maintain the required margin. This is a real risk of margin trading regardless of where interest rates stand.

Can I use MTF on any stock?

No. Only SEBI and exchange-approved securities, selected for liquidity and risk parameters, are eligible under MTF.

How mastertrust Helps

mastertrust offers a margin trading facility on 1000+ approved stocks with leverage available up to 4x, letting you use pledged shares or cash as collateral instead of tying up your full capital in a single trade. Every mtf position comes with a visible interest calculation upfront, so there's no guessing what the funded amount will cost you before you place the trade. You can review current mtf terms and eligible stocks directly through the Margin Trading Facility page on mastertrust.co.in.

Apart from MTF, mastertrust charges a flat rate of ₹20 per trade for intraday, futures & options, and equities. Thus, your total cost of trading remains constant irrespective of whether you are financing a transaction via margin trading or doing the transaction directly. If you are looking to analyze MTF against direct delivery-based investment, the MTF explainer on mastertrust's blog covers the mechanics step by step.

Final Thoughts

This 125-basis point interest rate reduction by the RBI till 2025, to be followed by a consistent holding until mid-2026, is one factor that has changed the scenario for all those people who are involved in the MTF equity market. Interest rates in general have come down. This means that the margin trading facility is now relatively easy to use, compared to what it used to be two years back. Even then, MTF involves leverage. Nothing has changed this fact.

Frequently Asked Questions (FAQs):

Q1. What is the present RBI repo rate in 2026?

At the June 2026 MPC meeting, the repo rate was 5.25%, remaining unchanged since December 2025.

Q2. How does the repo rate impact MTF interest rates?

Interest rates have a wider impact on the cost of funds for brokers with respect to MTF. A decline in the repo rate leads to a gradual reduction in the cost of margin trading financing.

Q3. Is margin trading risky?

Yes. Margin trading amplifies both gains and losses. A lower interest rate reduces your carrying cost, not your market risk.

Q4. Can I hold an MTF position for several weeks?

Yes, MTF positions can be carried forward as per exchange rules, unlike intraday margin, which requires same-day settlement.

Q5. Does mastertrust charge brokerage on MTF trades separately?

mastertrust applies its standard flat ₹20 per order pricing on intraday, F&O, and equity trades, with MTF interest charged separately on the funded amount.

Q6. Where can I check MTF eligible stocks on mastertrust?

The eligible stocks list and current MTF terms are available on the Margin Trading Facility page on mastertrust.co.in.