When you pledge your securities, you don't get the full market value as margin — you get a slightly reduced amount. This reduction is called a haircut, and here's why it exists: markets move every day, and the haircut is a safety buffer that protects against sudden price drops in your pledged securities. The simple formula is: 

Margin you receive = Current market value of pledged securities – Haircut %

So, for example, if you pledge shares worth ₹1,00,000 and the haircut is 20%, your usable margin is ₹80,000.