CDSC board to introduce lending procedure on Demat shares

ShareSansar, December 17:

Formation of the new board in CDS and Clearing limited (CDSC), has given way to introduce procedure for lending on demat shares.

According to a source, CDSC is planning to submit procedure for approval in the next meeting of the board. First meeting of the newly formed board was held today (Wednesday).

CDSC had prepared the lending procedure about a week ago, but was not able to issue it due to board dissolution.  After approval of the procedure for lending by the CDSC board, it will be ease for banks and financial institutions to provide loan on behalf of demat shares. 

“We are ready to lend on demat shares if we get concrete procedure”, said Anuradha KC, relationship manager at Mega Bank. “As we are adopting new practice, our concern is on security”, added KC. Mega bank has launched the margin lending scheme for the first time few weeks ago.

It has been almost a month since NRB had issued the directives related to loans against demat shares. Earlier there was only provision of providing loans on the basis of physical shares (against the collateral of share certificate).  

CDSC has made compulsion to dematerialize the physical shares on holding transfer from Kartik 22. Due to lack in provision of lending on demat shares, investors are not able to get loan from banks and financial institutions, which has pushed market in more downward trend.

As soon as investors are able get loan on demat shares, there is hope on market reversal to upward trend.