Loan for your Shares / Debentures
Do you need urgent cash but you don't wish to sell or liquidate your holding of shares?
Leverage your investments in shares, debentures, public sector bonds and Government securities for loans to meet unforeseen expenses!! You need not miss out on the next stock market boom!!
Avail of loans up to Rs.20.00 lacs against your shares/debentures to enable you to meet contingencies, personal needs or even for subscribing to rights or new issue of shares.
Note: Loan will not be sanctioned for speculative purposes inter-corporate investments or
acquiring controlling interest in company/companies.
Enjoy the SBI advantage
Low interest rates. Further, SBI charge interest on a daily reducing balance!!
Low processing charges; only 1% of loan amount - compare with 1-3% of others.
No hidden costs or administrative charges..
No prepayment penalties. Reduce your interest burden and optimally utilize your surplus funds by prepaying the loan.
The Scheme
Eligibility This facility is available to SBI's existing individual customers enjoying a strong relationship with SBI. This loan could be availed either singly or as a joint account with spouse in 'Either or Survivor'/ 'Former or Survivor' mode. It is offered as an Overdraft or Demand Loan. The facility is available at 50 select centers.
Salient Features
Purpose
For meeting contingencies and needs of personal nature. Loan will be permitted for subscribing to rights or new issue of shares / debentures against the security of existing shares / debentures.
Do you need urgent cash but you don't wish to sell or liquidate your holding of shares?
Leverage your investments in shares, debentures, public sector bonds and Government securities for loans to meet unforeseen expenses!! You need not miss out on the next stock market boom!!
Avail of loans up to Rs.20.00 lacs against your shares/debentures to enable you to meet contingencies, personal needs or even for subscribing to rights or new issue of shares.
Note: Loan will not be sanctioned for speculative purposes inter-corporate investments or
acquiring controlling interest in company/companies.
Enjoy the SBI advantage
Low interest rates. Further, SBI charge interest on a daily reducing balance!!
Low processing charges; only 1% of loan amount - compare with 1-3% of others.
No hidden costs or administrative charges..
No prepayment penalties. Reduce your interest burden and optimally utilize your surplus funds by prepaying the loan.
The Scheme
Eligibility This facility is available to SBI's existing individual customers enjoying a strong relationship with SBI. This loan could be availed either singly or as a joint account with spouse in 'Either or Survivor'/ 'Former or Survivor' mode. It is offered as an Overdraft or Demand Loan. The facility is available at 50 select centers.
Salient Features
Purpose
For meeting contingencies and needs of personal nature. Loan will be permitted for subscribing to rights or new issue of shares / debentures against the security of existing shares / debentures.
Loan will not be sanctioned for (i) speculative purposes (ii) inter-corporate investments or
(iii) acquiring controlling interest in company / companies.
Loan Amount You can avail of loans up to Rs 20.00 lacs against your shares/debentures.
Documents Required You will be required to submit a declaration indicating :
Details of loans availed from other banks/ branches for acquiring shares/ debentures.
Details of loans availed from other banks/ branches against security of shares/ debentures
Margin
You will need to provide a margin amount of 50% of the prevailing market prices of the shares/ non-convertible debentures being offered as security. (The market prices refer to the prices in the Stock Exchanges as reported in the Economic Times.)
Interest At SBAR Floating i.e. 13.75% p.a.
Repayment Schedule To be liquidated in maximum period of 30 months through a suitable reducing DP programme. In case of a default or if the outstanding is over Rs.20.00 lacs, the shares/debentures will be transferred in the name of the Bank.
Security: Pledge of the demat shares/debentures against which overdraft is granted.
Please contact the Branches at Identified Centres
List Of Identified Centres
1. Ahmedabad , Baroda , Surat , Gandhinagar , Rajkot
2. Bangalore , Mysore
3. Bhopal , Indore , Jabalpur , Raipur , Gwalior
4. Bhubaneswar , Cuttack , Sambalpur
5. Chandigarh , Jallandhar , Ludhiana , Amritsar
6. Chennai , Coimbatore , Tirupur
7. Guwahati , Shillong
8. Hyderabad , Visakhapatnam , Karimnagar , Tirupati
9. Kolkatta , Siliguri , Asansol (Bardhamon)
10 . Lucknow , Varanasi , Kanpur , Allahabad
11. Mumbai , Pune , Panjim , Aurangabad , Nagpur
12. New Delhi , Jaipur , Agra , Udaipur
13. Patna , Ranchi , Bhagalpur
14. Thiruvananthapuram , Cochin
CoverageScheme is available at select branches at 50 centres.Essential Parameters for acceptance of shares as security (i) The equity shares and debentures offered as security should be fully paid. Preference shares will not be acceptable as security (ii) The shares/ debentures offered as security must be in demat form. (iii) The share/ debenture should be of a company listed in BSE 100 Index, except those of SBI (iv) The market price of the security should not have fallen below par for preceding 52 weeks. (v) The market price of the security should not be as variance with the arithmetical average of preceding 52 weeks high and low by more than 25% in downward direction. (vi) ( P/E ratio of the company should not exceed 40 as published in Economic Times. In case P/E ratio is not available the shares/ debentures of the company should not be accepted as security. (vii) The total number of shares of the company traded on NSE and BSE should exceed 25000 on the day of financing and on each preceding 2 days. (viii) Security where the market price 52 week high is 4 times of the 52 week low should not be accepted. (Information related to 52 weeks high and low, P/E ratio and traded volumes in NSE and BSE is available in Economic Times).
Rating Debentures must have been rated 'AA+' or higher by CRISIL or equivalent rating by any other reputed rating agency like ICRA etc.
RepaymentTo be liquidated in maximum period of 30 months through a suitable reducing DP programme.
Declaration The applicant will have to submit a declaration indicating:·
details of loans availed of by them from other banks/ branches for acquiring shares/ debentures
details of loans availed from other banks/ branches against security of shares/ debentures
Transfer of shares Shares/debentures will be transferred in the name of the Bank when there is a default and the outstanding is over Rs.20 lacs.
Documentation
Application for overdraft limit against security of shares/ debentures indicating details of shares (i.e. ISIN of the company whose shares/ debenture are offered as security, number of shares/ debenture offered as security) along with borrowers DP ID and DP account number.
Applicant has to submit consent letter agreeing to regularize the account/ replenish the margin shortfall, on account of adverse market price variation, immediately on receipt of notice from the branch. Applicant will also submit consent to the condition that in the event of his failure to regularize the account immediately, Bank has the right to get the security transferred in its name and arrange for its sale, without any further reference to him. The Bank shall exercise this option without prejudice to its rights to recover the dues by other means also.
DP Note and DP Delivery letter.
Irrevocable Letter of Undertaking addressed to the Bank signed by all holders of the shares.
Dividend collection mandate(s).
Either or Survivorship Letter(if applicable). Security Pledge of the demat shares/ debentures against which overdraft is granted.
Nature of loan Is Overdraft / Demand Loan with the Repayment programme maximum 30 months.
Loan Amount You can avail of loans up to Rs 20.00 lacs against your shares/debentures.
Documents Required You will be required to submit a declaration indicating :
Details of loans availed from other banks/ branches for acquiring shares/ debentures.
Details of loans availed from other banks/ branches against security of shares/ debentures
Margin
You will need to provide a margin amount of 50% of the prevailing market prices of the shares/ non-convertible debentures being offered as security. (The market prices refer to the prices in the Stock Exchanges as reported in the Economic Times.)
Interest At SBAR Floating i.e. 13.75% p.a.
Repayment Schedule To be liquidated in maximum period of 30 months through a suitable reducing DP programme. In case of a default or if the outstanding is over Rs.20.00 lacs, the shares/debentures will be transferred in the name of the Bank.
Security: Pledge of the demat shares/debentures against which overdraft is granted.
Please contact the Branches at Identified Centres
List Of Identified Centres
1. Ahmedabad , Baroda , Surat , Gandhinagar , Rajkot
2. Bangalore , Mysore
3. Bhopal , Indore , Jabalpur , Raipur , Gwalior
4. Bhubaneswar , Cuttack , Sambalpur
5. Chandigarh , Jallandhar , Ludhiana , Amritsar
6. Chennai , Coimbatore , Tirupur
7. Guwahati , Shillong
8. Hyderabad , Visakhapatnam , Karimnagar , Tirupati
9. Kolkatta , Siliguri , Asansol (Bardhamon)
10 . Lucknow , Varanasi , Kanpur , Allahabad
11. Mumbai , Pune , Panjim , Aurangabad , Nagpur
12. New Delhi , Jaipur , Agra , Udaipur
13. Patna , Ranchi , Bhagalpur
14. Thiruvananthapuram , Cochin
CoverageScheme is available at select branches at 50 centres.Essential Parameters for acceptance of shares as security (i) The equity shares and debentures offered as security should be fully paid. Preference shares will not be acceptable as security (ii) The shares/ debentures offered as security must be in demat form. (iii) The share/ debenture should be of a company listed in BSE 100 Index, except those of SBI (iv) The market price of the security should not have fallen below par for preceding 52 weeks. (v) The market price of the security should not be as variance with the arithmetical average of preceding 52 weeks high and low by more than 25% in downward direction. (vi) ( P/E ratio of the company should not exceed 40 as published in Economic Times. In case P/E ratio is not available the shares/ debentures of the company should not be accepted as security. (vii) The total number of shares of the company traded on NSE and BSE should exceed 25000 on the day of financing and on each preceding 2 days. (viii) Security where the market price 52 week high is 4 times of the 52 week low should not be accepted. (Information related to 52 weeks high and low, P/E ratio and traded volumes in NSE and BSE is available in Economic Times).
Rating Debentures must have been rated 'AA+' or higher by CRISIL or equivalent rating by any other reputed rating agency like ICRA etc.
RepaymentTo be liquidated in maximum period of 30 months through a suitable reducing DP programme.
Declaration The applicant will have to submit a declaration indicating:·
details of loans availed of by them from other banks/ branches for acquiring shares/ debentures
details of loans availed from other banks/ branches against security of shares/ debentures
Transfer of shares Shares/debentures will be transferred in the name of the Bank when there is a default and the outstanding is over Rs.20 lacs.
Documentation
Application for overdraft limit against security of shares/ debentures indicating details of shares (i.e. ISIN of the company whose shares/ debenture are offered as security, number of shares/ debenture offered as security) along with borrowers DP ID and DP account number.
Applicant has to submit consent letter agreeing to regularize the account/ replenish the margin shortfall, on account of adverse market price variation, immediately on receipt of notice from the branch. Applicant will also submit consent to the condition that in the event of his failure to regularize the account immediately, Bank has the right to get the security transferred in its name and arrange for its sale, without any further reference to him. The Bank shall exercise this option without prejudice to its rights to recover the dues by other means also.
DP Note and DP Delivery letter.
Irrevocable Letter of Undertaking addressed to the Bank signed by all holders of the shares.
Dividend collection mandate(s).
Either or Survivorship Letter(if applicable). Security Pledge of the demat shares/ debentures against which overdraft is granted.
Nature of loan Is Overdraft / Demand Loan with the Repayment programme maximum 30 months.
7 comments:
Good post,loan against securites can surely be considered by the investor to meet his funding requirements.
A very informative article. These shares are very liquid, from high quality companies, and highly valued securities. The amount depends on valuation of shares, margin allowed by the bank, and your past credit history.
The loan against securities is the type of loan that is offered when you pledge some of your security holdings. The procedure is also very simple as you just need to pledge your securities and the loan will be yours
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