Dissolution of CDSC board resulted in delaying of Demat loan issuance

ShareSansar, December 12:

CDS and Clearing limited (CDSC) is planning to introduce procedure for issuance of Loan on Demat shares.  

ˊWe have prepared the procedure but it need to be approved by our board which isn’t formed yet, ˋ said CDSC Chief Executive Officer Subodh Sharma Sigdel.
 
If board is constituted on coming week than there shouldn’t be much delaying in executing the given directives related to Demat shares loan, he added. However, if the board doesn’t formed soon, then to will take consent from the Sebon or NEPSE to implement the same at the earliest.
 
It has been almost a month since the NRB has issued the directives related to Demat shares loan. But nothing as such has been implemented so far, given the case of dissolution of Board of CDSC.

What will be the process?

Firstly, Banks will have to open Beneficiary Owner (BO) Account / Demat account with the depository participants (DP). Later on, both investors and the bank have to confirm the list of shares to be pledged as margin lending in the bank.  
 
Both bank (pledgee) and investor (pledgor) will have mutual agreement regarding loan and shares to be pledged.  Investor has to fill up the pledged request form (PRF) and submit it to Pledgor Depositary Participants (DP). After receiving PRF, pledgor DP sets up request in the System to block the securities in investor BO’s Account.

Pledgee or bank will receive the copy of PRF from investor and submit it to the pledgee DP.  Pledgee Dp will accept the request and entry it in the system. Then, shares will be blocked in Investor’s account. These blocked shares will not be able to trade.

Investor will get Bonus dividend offered by companies in their account but it will remain untradeable too.

To unpledge the securities is simple too. Process is same as in pledging but in this process investor has to fill up Unpledged Request Form.