A margin penalty is a fee levied when there is an insufficient margin in a trading account. Exchanges mandate clients to maintain ample margins for their trades and to transfer funds in case of a margin shortfall, indicating a deficit of funds or margin in the trading account.  Tradejini does not allow clients to take positions in case of insufficient upfront margins.   But in following cases Shortfall of Margin can occur which is post initiating a trade. 

1. Ad-hoc margin requirements added by exchanges due to volatility.
2. Incremental Physical delivery margins in stock F&O contracts in the last week of expiry
3. Closure of one side of Hedged Positions resulting in increase in Margins 
4. Mark to Market (MTM) Losses 

Such shortfalls in margins need to be fulfilled by the client within the deadlines and failure to do so will lead to Margin Shortfall penalty by the Exchanges.

How Charges are Applied:

If a client defaults three times in a month, they will be charged 1% on the shortfall amount. On the fourth default within the same month, a 5% charge is applied to the deficit amount.

If a penalty is charged for such non-upfront margins, the corresponding fund statement entry will be posted on the T+6th day, as margin reporting is due on T+5 days to the exchanges.

What is a margin penalty, and why is it charged?