What is 'Haircut' in Pledge?

A haircut is the portion of your stock's value that the broker keeps aside for safety when you pledge a stock. The remaining value is provided to you as pledge balance.

Example: If you pledge a stock worth ₹1000 with a 20% haircut:

₹200 is reserved as the haircut.
You receive ₹800 as your pledge balance.

Your stock remains worth ₹1000, and you can sell it at that price anytime. The haircut only reduces the margin or funds available while ensuring safety for the broker.

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