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STANDARD VIEW
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1
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20
loan against shares
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#u$lishe% $& 'eepali #ar%eshi
this %o(u)ent will help u in un%erstan%ing that how &ou (an get loan against shares
See )ore
Loan *gainst Shares
2010+2011 #age 1
INTRODUCTION
,he )ain purpose o- ta!ing loans against shares is to preser.e in.est)ent, apart -ro) ta!ing(are
o- personal nee%s/ #eople also resort to su(h a loan to )eet their (ontingen(ies an% getli0ui%it&
without a(tuall& selling the shares/ 1t is a%.isa$le to ta!e loan against e0uit& (shares2
%e$entures) onl& when &ou are e3pe(ting a (ertain su) o- )one& a -ew )onths %own theline an%
&ou nee% so)e -un%s in the interi)/ 1- &ou are rein.esting the loan a)ount, ensurethat the
$ene-its &ou %eri.e are )ore than the (ost &ou ha.e to in(ur (whi(h in(lu%es interestan%
pro(essing -ee)/ 4are-ull& (onsi%er the ris! in.ol.e% in su(h a )o.e/Loan against shares is
a.aila$le in the -or) o- an o.er%ra-t -a(ilit& against the ple%ge o- -inan(ial se(urities li!e
shares5units5$on%s/ *-ter &ou su$)it the loan appli(ation with all theshare (erti-i(ates an% other
rele.ant %o(u)ents, a (urrent a((ount is opene% in &our na)e/6ou (an then with%raw up to the
a)ount san(tione% an% interest will $e (harge% onl& -or thenu)$er o- %a&s &ou use the a)ount/
,he loan a)ount that (an $e san(tione% %epen%s on two-a(tors: the e3tent o- -un%ing on a
parti(ular sto(! an% the pri(e ((alle% the $ase pri(e)(onsi%ere% $& the len%er -or (al(ulating the
.alue o- the shares/,he Reser.e Ban! o- 1n%ia (RB1) allows $an!s to len% up to "7 per (ent o- the .alue o-
%e)atshares an% 70 per (ent o- the .alue o- ph&si(al shares/ 8owe.er, $an!s (an, an% %o, -i3
their own li)its with respe(t to the e3tent o- -un%ing within that range/ 9enerall&, %e)at
sharesget &ou a larger loan a)ount, in a )u(h -aster ti)e, at lesser rate o- interest an% at
s)aller pro(essing -ee, than those in ph&si(al -or)/ :.er& len%er has an appro.e% list o-
se(uritiesthat he len%s against an% this list .aries -ro) one len%er to the other/ ,here are
other (on%itions that len%ers appl& on e0uit& loans/
y
,he loan is e3ten%e% against shares o- eligi$le (o)panies an%, in a -ew (ases, units o- repute%
open+en%e% )utual -un%s/
y
9enerall&, a )a3i)u) o- 20 shares (an $e ple%ge%, at a ti)e/
y
O
nl& -ull& pai%+up shares, in the len%er;s appro.e% list o- se(urities, are a((epte%/
y
S
hares hel% in the na)e o- )inors, 8<Fs, =R1s an% (o)panies are generall& nota((epte%/
y
Loans against )utual -un% units are $ase% on their =*V .alue
Loan *gainst Shares
2010+2011 #age 2
NECESSITIES FOR LOAN AGAINST SHARES
>
Necessary Conditions
y
,he shares shoul% $e on the appro.e% list o- the $an!, whi(h woul% $e re.ise% -ro)ti)e to ti)e/
y
,he shares shoul% $e -ull& pai% up
y
S
(rips in the na)e o- (orporate, )inors, Fir)s, 8<F, an% =R1s are not eligi$le -or -inan(e un%er this
s(he)e/
y
,he %ire(tors or pro)oters o- (o)panies (annot ple%ge s(rips o- the sa)e (o)pan&/
y
*ll shares shoul% $e stri(tl& in their )ar!eta$le lots/
>
Docuents Re!uired
S"ares in Deat For
y
Re0uest -or) -or transa(tion/
y
#hoto(op& o- %i.i%en% warrants o- shares an% units to $e ple%ge%/
y
4o.ering letter -ro) the (o)pan& re(ei.e% $& the sharehol%er at the ti)e o- trans-er/
S"ares in P"ysica# For
y
S
hare (erti-i(ates
y
S
igne% an% .ali% trans-er %ee%s (not )ore than a )onth ol%)
y
#hoto(opies o- %i.i%en% warrants o- shares an% units to $e ple%ge%
y
*llot)ent letter -or rights or $onus shares -ro) the (o)pan&, or $ro!er (ontra(t notespe(i-&ing
share (erti-i(ate an% %istin(ti.e nu)$ers/
y
4o.ering letter -ro) the (o)pan& re(ei.e% $& the sharehol%er at the ti)e o- trans-er/
>
Genera# In$oration
y
,he a)ount o- loan that (an $e a.aile% un%er ?Loans against
S
hares? %epen%s on the-or) o- shares + ph&si(al or %e)at/ * )ini)u) a)ount o- Rs/ 70,000 has to
$e ta!enun%er the s(he)e/ *s -or the )a3i)u) a)ount, it is up to Rs/ 10,00,000 -or ph&si(alshares an% up to Rs
20,00,000 -or 'e)at shares/
Loan *gainst Shares
2010+2011 #age @
y
,he rate o- interest that is (harge% on loan against shares usuall& ranges $etween 12Aan% 1BA/
*n e3tra interest o- 2A p/a/ )ight also $e (harge% on the a)ount $& whi(h&our outstan%ing a)ount
e3(ee%s the li)it an% -or the perio% it is in e3(ess/
y
*part -ro) &our own shares, &ou (an also ple%ge the shares o- &our spouse, (hil%ren(a$o.e 1B
&ears o- age), parents, $rother(s)5sister(s), in laws, gran%parents an%gran%(hil%ren (a$o.e 1B
&ears o- age)
y
,he a)ount o- loan that &ou will get %epen%s on the .aluation o- the se(urit&,appli(a$le )argin,
&our a$ilit& to ser.i(e an% repa& the loan an% other (on%itions, asappli(a$le -ro) ti)e to ti)e an%
-ro) $an! to $an!/
y
,he (harges that are le.ie% in (ase o- loan against shares in(lu%e pro(essing -ees(usuall& 1+1/7A
o- the loan a)ount) an%, at ti)es, %o(u)entation (harges (.aries-ro) $an! to $an!)/
y
1n (ase o- %e)at sharesC aroun% "7A o- the a)ount o- s(rips ple%ge% is a.aila$le aso.er%ra-t/ ,he
per(entage %rops %own to 70A i- the shares are in ph&si(al -or)/
Loan *gainst Shares
2010+2011 #age 4
DE%AT ACCOUNTDe$inition
'e)at a((ount is a sa-e an% (on.enient )eans o- hol%ing se(urities Dust li!e a $an! a((ountis
-or -un%s/ ,o%a&, pra(ti(all& EE/EA settle)ent (o- shares) ta!es pla(e on %e)at )o%e onl&/,hus,
it is a%.isa$le to ha.e a Bene-i(iar&
O
wner (B
O
) a((ount to tra%e at the e3(hanges/
&
an' Account Vs Deat Account
S(No(
&
asis O$ Di$$erentiation
&
an' Account Deat Account)(
For o$ Ho#din*s+De,osits
Fun%s
S
e(urities
-(
Used $or
S
a-e!eeping o- )one&
S
a-e!eeping o- shares
.(
Faci#itates
,rans-er o- )one&(without a(tuall&han%ling )one&),rans-er o- shares(without a(tuall&han%ling
shares)
/(
W"ere to o,en
* $an! o- (hoi(e* '# o- (hoi(e ((an $e a $an!)
0(
Re!uireent o$ PAN Nu1er
=ot Fan%ator&Fan%ator& (e--e(ti.e-ro) *pril 01, 200")
2(
Interest accrua#on "o#din*s
1nterest in(o)e is su$De(tto the appli(a$le rate o- interest =o interest a((ruals onse(urities hel%
in %e)ata((ount
3(
%iniu1a#ancere!uireent
*GBH )aintainan(e isspe(i-ie% -or (ertain $an! a((ounts =o su(h re0uire)ent
4(
Eit"er orSur5i5or $aci#ity
*.aila$le =ot a.aila$leH*GB + *.erage Guarterl& Balan(e
*(ti.it& (20)
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