MTF hits record Rs 1.27 lakh crore as investors borrow more to buy stocks. Is it a ticking time bomb?

The MTF (Margin Trading Facility) book surged 11.1% month-on-month to a record Rs 1.27 lakh crore, even as FIIs pulled out Rs 2.8 lakh crore from Indian stocks this calendar year and overall market turnover stayed flat. Nearly 50% of the industry MTF book is concentrated in non-F&O, illiquid stocks, raising concerns about cascading margin calls and forced liquidations if markets correct. Industry leaders including Zerodha CEO Nithin Kamath have warned that leveraged positions in mid- and small-cap stocks pose systemic risk to brokers and the broader financial ecosystem.