Markets
Securities Lending and Borrowing Mechanism
The Securities Lending and Borrowing Mechanism (SLBM) is a facility that allows investors to lend their shares to other market participants in exchange for a fee. It is a SEBI-regulated mechanism that improves market liquidity and enables short selling in a structured and transparent way.
If you hold shares in your demat account and want to earn additional income without selling them, SLBM can be an interesting opportunity.
Why consider SLBM
- Earn passive income on long-term holdings
- No need to sell shares
- SEBI-regulated mechanism
- Reduced counterparty risk
- Improves portfolio yield
- Supports market liquidity
Points to remember
- SLBM is regulated by SEBI and transactions are cleared by exchange clearing corporations.
- Retail, HNI, corporates and other investor types can participate through brokers offering SLBM services.
- Ownership remains, but voting rights may not be available during lending.
- Clearing corporations act as intermediaries and manage settlement risk.
- Lending rates depend on demand for the stock.
- Shares cannot be sold during the lending period. They are locked for the agreed lending tenure.
A note on our role: We are neither qualified certified financial planners nor SEBI Registered Investment Advisors. We only suggest and/or recommend investments which are either incidental to each asset class or as recommended by our principals, and execute them in the capacity of distributors/intermediaries.
