What is SLB?
Securities lending and borrowing (SLB) is temporary lending of securities executed by a lender to a borrower of securities, for a stipulated duration, at a certain fee.
The SLB scheme is facilitated by the Exchange, through a screen based exchange-traded system. It has a centralized anonymous order book and all the borrowing and lending are cleared, settled and guaranteed. The expected lending fee is quoted as price and the tenures are available up to 12 months.
In this Platform, trader can borrow shares that they do not already own or can lend the stocks that they own. An SLB transaction has a rate of interest and a fixed tenure.
SLB is a legally approved medium for lending and borrowing of securities. The regulations were originally formed by SEBI in May 1997 and last modified in Nov 2012. All market participants including retail (except Qualified Foreign Investors) in the Indian securities market have been permitted to lend/borrow securities but only through an Authorized Intermediary (AI).
NCL (NSE clearing limited) and BOISL (BSE clearing corporation) are the only 2 authorized intermediaries presently, NCL is preferred and is getting bulk of the transactions today by the GEPL.