Hello and welcome to the Current Affair's Portal of ExamPundit.in. HDFC Bank Ltd is offering loans against shares in about two-three minutes by completely digitising the loan mechanism.
For this, the bank has tied up with National Securities Depository Ltd (NSDL). Shares dematerialised by NSDL and executed through HDFC Bank demat account could be used for pledging. This is a first-of-its-kind initiative in India and probably the first in the world as well. HDFC Bank and NSDL had consulted the Reserve Bank of India (RBI) before developing the product.
An HDFC Bank customer can now login to the bank website and pledge her shares, dematerialised by NSDL, and can get instant loans, deposited in a freshly opened current account. The customer doesn't have to fill any form or visit any branch of HDFC Bank. The bank, on its part, has identified more than 400 widely traded shares that are acceptable for pledging. The loan can be roughly 50 per cent of the value of shares pledged or more, depending on the credibility and float of the underlying company. The maximum regulatory ceiling for the loan is Rs 20 lakh.
Earlier, the process was a lengthy one that required the customer to visit the bank branch and fill up forms, which would then take days to process.
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