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What are the Benefits for Lenders & Borrowers?

Benefits for Lenders

Lenders can earn additional income from the idle portfolio held as they receive a certain fee to lend the stock, depending upon the demand and time value. 

Lenders are entitled to all the corporate action like dividend, bonus etc. that takes place during the lending period.

No counterparty risk as all the transactions is guaranteed by the Clearing Corporations.

Transactions done in the SLB segment will not be treated as Transfer, based on clarification from Income Tax vide their circular no. 2/2008, dated 22 Feb, 2008 and Section 47(xv) of the Act. Thus there is no additional implication of Capital Gain Tax.

Benefits for Borrowers

SLB enables borrowers to meet the obligation in case of shortage in delivery and avoid an auction (seller shortage) in the Cash segment.

SLB enables arbitrage opportunity for borrowers if there is a price difference in the Cash and Derivatives market.

SLB enables borrowers to meet the obligation arising out of physical settlement under the derivatives segment.

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