BNPL: Buy now shares and pay later

Q: Is any collateral required to avail of the BNPL trading facility?

There are 3 important terms in understanding demat account in India. No additional collateral will be required as the stocks purchased through the BNPL trading facility are pledged as collateral.

Q: What is the additional amount given by IIFL Securities for BNPL trades?

If your buying power is Rs 1,00,000, IIFL Securities will provide an additional amount of a maximum of Rs 4,00,000. However, leverage may vary for each stock based on IIFL’s risk management policy.

Q: Can I sell the Buy Now Pay Later positions on the same day?

Yes, you can. Buy Now Pay Later positions sold on the same day will be treated as intraday transactions.

Q: What will happen if I do not give the OTP confirmation till the 2 nd trading day?

If you miss the given OTP confirmation till T+2 days, the purchased shares will be auto- squared-off on the T+6 th day. To avoid auto-square-off in this scenario, ensure you keep sufficient funds in your account to convert the BNPL stocks into delivery.

Q: How does IIFL Securities reduce my initial investment amount to purchase stock through BNPL?

Let’s say that you want to buy a share worth Rs 100. However, you do not have Rs 100 to buy the share. You can execute a BNPL transaction where you have to invest only Rs 20. IIFL Securities will multiply your initial investment amount (Rs 20) by up to 5 times, providing you with an additional Rs 80. With the additional leverage of Rs 80, you will now have Rs 100 to invest (Rs 20 + Rs 80), allowing you to buy the Rs 100 share.

Q: What are the various factors included in the BNPL facility?

The Initial Investment Amount: The fractional amount you must pay while placing a BNPL trade. The Additional Leverage: The amount loaned by IIFL Securities over and above the initial investment amount. The Collateral: The stock purchased using the BNPL facility is pledged as collateral with the stockbroker. Margin Call: You may need to add more funds (margin) to the margin account due to increased stock volatility,decrease in stock value, removal of stock from the exchange and other such factors.IIFL Securities will inform you in case additional funds are required for a margin call.

Q: What will happen if I do not add funds based on the margin call by IIFL Securities?

If you fail to add more funds, IIFL Securities will sell the equivalent value of the BNPL stock pledged as collateral.

What is Buy Now Pay Later (BNPL)?

Buy Now Pay Later is a form of short-term financing to buy more stocks with the same capital amount.When you place a BNPL order, you invest a fraction of the stock’s total purchase value and the stockbroker lends the remaining amount at a nominal interest rate to be repaid later.

How does BNPL with IIFL Securities work for investors?

As you have to invest a small portion of the total investment amount, and IIFL Securities invests the remaining on your behalf at a nominal interest rate of 0.05%*, you can buy up to 5x quantity of stocks. This option results in a better Return on Investment as compared to normal delivery trade. Let’s understand this with a simple example.

Watch Video to Understand the Power of Buy Now Pay Later

Let's understand this with a simple example.

Scenario 1

Normal Trade

Your stock market investment = Rs 1 lakh
Stock value after two months = Rs 1.1 lakh
Net profit after selling the stock = Rs 10,000.

The overall return on investment = 10%

Scenario 2

Buy Now Pay
Later Trade

Your stock market investment = Rs 1 lakh
IIFL Securities investment (on your behalf) = Rs 4 lakh
Total buy value of stocks = Rs 5 lakh
Stocks values after 2 months = Rs 5.5 lakh

Net profit after selling the stock = ₹50,000
Interest charged at 0.05%* per day = ₹12,000

Net Profit = ₹38,000 or 38%.

*Please note that this is an example. The interest charged will be as per the agreement with IIFL Securities.

With Buy Now Pay Later, your 10% returns have been increased to 38% returns!

Eligibility for BNPL Trading Facility: A Margin Account

To avail of the BNPL facility, you must have a Demat account and an active margin account. A margin account is where the stockbroker lends the amount to purchase more stocks. Once you have opened a margin account, you are eligible to make BNPL trades while placing an order for BNPL-eligible stocks. For ease of BNPL trading, IIFL Securities has designed the margin account opening process in just a single click while placing the first BNPL order.

Benefits of Buy Now Pay Later

Up to 5x Leverage: You can buy up to five times more stocks as the purchased stock amount is up to four times more.

Effective Risk Management: The excess money allows you to buy various stocks to spread the risk and diversify your portfolio.

Helpful in case of shortage of funds:You can make bigger investments when you are low on funds and cannot buy high-value stocks.

Benefit From Corporate Actions:Dividends earned through the stock purchased via BNPL will be credited to your bank account. Therefore, if you have purchased 5 times stock through BNPL, you will get 5x benefit through corporate actions.

Why choose BNPL with IIFL Securities?

Easy management of BNPL trades via the "Buy Now Pay Later account"

Check your total BNPL amount in a single click

Only stockbroker in the industry to offer the facility of placing partial unpledged requests

Attractive and affordable interest rates for effective repayment of the leverage amount

No need to wait till the end of the day for OTP confirmation (Live from August 30, 2022)

How to Place a Buy Now Pay Later Order with IIFL Securities?

Select the product as “BNPL” or “Buy Now Pay Later” while buying the stock.

After 6 PM, complete the 3-step OTP confirmation on CDSL/NSDL website. You will receive intimation from IIFL Securities & CDSL for the same.

Note: After August 30, 2022, you can enter the OTP in real-time so that you do not have to wait till the end of the trading day.

Watch Video

Confirm the OTP to pledge BNPL stocks within two trading days. However, this step will not be required after August 30, 2022.

Frequently Asked Questions

01. Is any collateral required to avail of the BNPL trading facility?

02. What is the additional amount given by IIFL Securities for BNPL trades?

03. Can I sell the Buy Now Pay Later positions on the same day?

04. What will happen if I do not give the OTP confirmation till the 2 nd trading day?

05. How does IIFL Securities reduce my initial investment amount to purchase stock through BNPL?

What are the various factors included in the BNPL facility?

07. What will happen if I do not add funds based on the margin call by IIFL Securities?

Place BNPL Order

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