Mumbai, May 20 -- Zerodha founder Nithin Kamath has flagged rising risks in the margin trading funding (MTF) segment as outstanding industry exposure crossed Rs 1.22 lakh crore.

MTF allows investors to buy stocks by paying only a portion of the total value upfront, with brokers funding the remaining amount. This helps traders take larger positions with limited capital and can amplify gains in rising markets.

However, MTF also increases risk. Losses can widen sharply if stock prices fall. Brokers may face difficulty recovering dues if leveraged positions become illiquid, especially in mid-cap and small-cap stocks where lower circuits can block exits during market crashes.

In a post on X, Kamath said MTF books are growing rapidly across ...