Demat shares can be kept as collateral; Happy news for investors

ShareSansar June 19:

There have been a total number of 36,354 beneficial owners of Demat Account and the total number of shares in demat form have reached 3,00,44,363 units.

Ms. Sabina Pujari, Head of Admin, Business Development & Operations Department of Central Depository System and Clearing Limited (CDSC) says, “the process of getting loans by pledging demat shares is as smooth as getting loans by keeping physical shares as a collateral”.

She added, shareholders are already getting margin loan against demat shares. Commercial banks like Siddhartha Bank and Citizens International Bank Limited which is also our depository participant (DP) are providing loan against demat shares. The process of providing loans against demat shares are same like it was for providing loans against physical shares.

Like physical shares, demat shares can also be sold by the banks in auction in the case of defaulter, if any.

Mr. Hari Thapa, an official of Credit Administration department of Citizen Bank said that “the shares that are being kept as collateral will be shown as halted in the respective DP account and the one who is taking loan must provide (Share Cheque) to the bank with the amount of shares kept as collateral and also with their signature on it. Then we verify with the respective DP and then retain it.

Though the guidelines regarding loans against demat shares given by CDSC is not that clear but with time the process of providing loan has smoothen, he added.

Shikhar Insurance, Global IME Bank, Unilever Nepal, Himalayan General Insurance, Mahalaxmi Finance Limited, Everest Finance Company, Taragaoun Regency Hotels were listed  by CDSC to get their shares fully dematerialized by Baisakh 6, 2072.

Later, Nabil Bank, Ace Development Bank, Everest Insurance, United Finance, Sunrise Bank, Butwal Power Company and Vibor Bikas Bank were to be traded and settled only in DMAT form after Baishakh 14 but because of the massive earthquake on  Baishak 12 the shares of these companies were considered for trading and settlement in DMAT form only from Jestha 17, 2072.

Also, the shares of 7 companies which are Nepal Investment Bank Limited, Sanima Mai Hydropower Limited, Standard Chartered Bank Limited, Jyoti Bikas Bank, Nirdhan Uthhan Bank Limited, Prudential Insurance Company Limited and NIDC Development Bank Limited were supposed to be traded and settled in DMAT form after Baishak 26 has been postponed for now. As per the CDSC, the decision related with it will be made at the earliest.

Lists of upcoming demat companies will be prepared after the successful implementation of the prior list.

CDSC progress at a glance: