What It Means
To pledge shares is to mark them as collateral against a broker-funded position — like MTF — without transferring ownership. The shares stay in your demat account; they're just flagged as security for what the broker has lent you.
How It Works
Pledging happens electronically through your depository (CDSL or NSDL) the moment an MTF position is opened — no physical paperwork. SEBI mandates a small pledge charge, and a matching unpledge charge when you close the position and the shares are released, typically somewhere in the ₹15–50 range plus GST. It's a minor cost next to the interest on an MTF position, but it adds up if you enter and exit positions frequently.
Warning
Pledged shares are still yours — they don't disappear from your holdings, and you still own them. What changes is that you can't sell or transfer them freely until the funded amount is repaid and they're unpledged.