Using the plane wave based pseudopotential method under the density functional formalism, the geometry and electronic structures of M and M-4 encaged (BN)(36) clusters have been investigated, where M represents Ti, V, Cr, Mn, Fe, Co, Ni, and Cu atoms. The lowest energy structure of the M(BN)(36) cluster shows that the impurity atom prefers to occupy either the center or off-center and close to the hexagonal ring of the cage. Geometry and electronic structures of M-4 clusters have been calculated in the bare state as well as inside the octahedral (BN)(36) cluster. For free M-4 clusters, except Cu-4, which forms a planar rhombus structure, all other tetramer clusters adopt three dimensional bent rhombus or tetrahedron configuration. In sharp contrast, the equilibrium structure of M-4 clusters inside the (BN)(36) cage results in significant deformation in comparison to that in the free state. Unlike others, it is found that the stability of V-4, Fe-4, Co-4, and Ni-4 tetramers have been enhanced inside the cage. Importantly, these small clusters are found to retain their magnetic nature even after encaging them inside the (BN)(36) cluster. In general, the magnetic moment of the M-4 clusters are found to decrease inside the (BN)(36) cage, except that for Cr-4 cluster, which showed significant increase in the magnetic moment. The electronic density of state analysis of these systems shows additional electronic states in the large gap of (BN)(36) cluster originated by the M atoms or M-4 clusters.