Securities Lending
& Borrowing.
A SEBI-introduced facility that lets you earn a fee on shares you already own and have no plans to sell.
What lenders earned on the last trading day.
Every contract that traded in the exchange’s SLB session: the fee per share, how many shares were lent, and what that fee works out to over a year at the share’s last price.
Loading the lending market…
How SLBM works
If you hold shares in your demat account that you are not planning to sell, you can lend them to another investor for a short period through the stock exchange, and earn a lending fee for doing so. Lend 100 shares at ₹10 per share and you earn ₹1,000 in additional income.
The Clearing Corporation stands in the middle and guarantees settlement, which is what makes the mechanism safe. Your shares are delivered at the pay-in for the first leg and come back at the end of the contract.
Before you lend
Unlike a pledge, lent shares leave your demat at the pay-in for the first leg. They return at the end of the contract or on recall.
A borrower pays the lending fee upfront as margin. A lender is charged 25% of the lending price plus end-of-day MTM, unless an early pay-in of securities is made.
Stocks in the F&O segment can be lent, along with others the exchange makes eligible from time to time.
NRI clients are permitted to participate on the lending side only.
From the trade to the shares coming home.
The timings NSE Clearing runs an SLB contract on, from the day it is agreed to the first Thursday it ends.
- 1T day · 9:15 am – 5:00 pmThe trade is agreed
In the exchange’s SLB session. The lender quotes a fee per share and picks a month up to twelve months out; the borrower agrees it.
- 2T+1 · 8:00 amFirst leg pay-in
The lender’s shares and the borrower’s money go to NSE Clearing, which stands between the two sides from here on.
- 3T+1 · 10:00 am – 11:30 amShares out, fee in
Shares are paid out to the borrower at 10:00 am; the lending fee is paid out to the lender at 11:30 am.
- 4During the contractDividends, recall, rollover
Dividends pass to the lender. Either side can end early (recall or repay) until three working days before the return date, or roll to a later month within twelve months in all.
- 5First Thursday of the month · 9:00 amReverse leg
The borrower returns the shares; they reach the lender at 11:30 am. If the borrower fails to deliver, NSE Clearing runs a buy-in auction that afternoon.
What happens to a loan when the company acts.
Pick an event. Only a dividend or a stock split leaves a contract running; everything else closes it early.
Dividend
One working day after the record date (or the start of book closure), NSE Clearing debits the dividend on the lent shares from the borrower and credits it to you. You get the dividend you would have had.
Work it out the way SLB is quoted: per share.
A lending fee is agreed in rupees per share for the whole contract. This turns it into what you receive and what it is worth a year.
- Value of shares lent
- ₹7,50,000
- Fee as a share of that value
- 0.40%
- The same, per year
- 1.60%
- Lender margin on T day (25%, plus MTM) unless you deliver early
- ₹1,87,500
The fee is set by the market, per contract, so treat yours as an input, not a forecast. No STT and no exchange transaction charge apply to SLB, and lending is not treated as a transfer for capital gains (CBDT circular 2/2008); the fee itself is income in your hands. If the contract is closed early by a corporate action, you return the unearned part of the fee.
- you hold F&O-eligible stocks you do not plan to sell for months
- the shares are free in your demat, not pledged
- you are comfortable with them leaving your demat until the return date
- you might need to sell at short notice — ending early costs a market-set fee
- you want to vote at an AGM — use an X-series contract or do not lend
- a corporate action is due — the loan would close early anyway
Ask the desk to lend or borrow for you.
Tell us the stock and the size. The desk checks eligibility, the going fee and the series, and calls you before anything is placed.
SLBM, step by step.
- 1Talk to your relationship manager
They confirm whether lending or borrowing suits what you hold and what you are trying to do.
- 2Activate SLBM on your account
A one-time activation on your existing trading and demat account — no separate account is opened.
- 3Exchange registration
We register you with the exchange for the segment. Lending and borrowing are enabled separately.
- 4Place your first order
Quote a fee and a tenure. Nothing moves out of your demat until the order is matched.
Understand SLBM properly.
How it works, the types, both sides and the comparisons — for when you want the full picture.
Idle holdings, put to work
Lend or borrow across the stocks the exchange makes eligible for SLB.
A dividend is passed back to you, and a stock split adjusts the contract. A bonus, rights issue, merger or open offer closes it early and your shares come back.
Choose lending or borrowing terms that fit your holding period and objective.
NSE Clearing (formerly NSCCL) guarantees settlement, so counterparty risk sits with the clearing corporation rather than with you.
What each side gets out of it
One transaction, two entirely different reasons for doing it.
If you are a lender
You hold stock you were not going to sell anyway.
A lending fee on shares that would otherwise sit in the demat account doing nothing.
You quote the lending fee and the tenure you are willing to lend at — it is not fixed for you.
The borrower posts margin with the clearing corporation, which stands between the two of you.
You set the tenure and the fee you are willing to lend at; nothing moves until a match is made.
If you are a borrower
You need stock you do not own, for a defined period.
Borrow a specific security for a specific window rather than buying it outright.
Deliver against a short in the cash segment instead of failing settlement and going to auction.
Run cash-futures and other strategies that need the underlying in hand.
The clearing corporation is the counterparty to both legs, so neither side is exposed to the other.
SLBM, answered.
Presently, securities on which derivatives are available in the F&O segment are available for transactions in SLB.
An SLB contract settles on the first Thursday of every month.
For a borrower, only the lending fee is levied upfront as margin. For a lender, 25% of the lending price (the T-1 cash market closing price) plus end-of-day mark-to-market is charged. These margins do not apply if the lender makes an early pay-in of securities.
No margins are levied on the lender. For the borrower, 100% of the lending price, Value at Risk, Extreme Loss Margin and end-of-day MTM apply, similar to cash market margins.
NSE Clearing (formerly NSCCL) guarantees SLB settlement, so counterparty risk is covered by the clearing corporation.
Rollover shifts a position to the next month. Recall lets a lender take shares back before the contract ends. Repay lets a borrower return shares before expiry.
The dividend is passed on to the lender: one working day after the record date, NSE Clearing debits it from the borrower and credits it to the lender. A stock split adjusts the contract in proportion. A bonus, rights issue, merger, amalgamation or open offer closes the contract on the record date instead; the shares go back to the lender, who returns the unearned part of the lending fee, pro rata.
At the pay-in for the first leg, unless you deliver early to avoid the lender’s margin.
Minimum one month, maximum twelve months.
No. NRI clients can participate in lending only.
Put idle holdings to work.
Talk to your relationship manager about whether your holdings are eligible.