# What is a Margin Shortfall?

Margin Shortfall occurs when the margin available in an investor's account does not satisfy the margin requirements decreed by SEBI.

For example, Mr Harsha has Rs. 40,000 in his trading account on Wednesday. He purchases 10 TCS shares at Rs. 3,000 per share.

Suppose on Wednesday you have added Rs. 40,000/- to your account. You purchase shares worth the same (10 shares each worth Rs. 4000). Let’s say the complete margin applicable in this case is 70% of the value. Rs. 28,000/- will be the margin required for your Buy trade on Wednesday and reported to the exchange as completely collected.

On Thursday, you sold the share 10 shares for Rs. 5000 each.
Margin required now=  (10 x Rs. 5000) x 70%= Rs. 35,000
The total margin required=  Rs. 28,000 + Rs. 35,000= Rs. 63,000

But you only have Rs. 40,000 in your account.
Margin shortfall on Thursday= Rs. 63,000 - Rs. 40,000= Rs. 23,000

margin penalty will be levied as specified by the exchanges.

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