Share pledge can be used for two purpose

Pledging of shares to take loan in the bank:

In this process you block the value of shares and transfer to the demat account through Delivery Instruction Slips (DIS) in order to take loans against pledged shares from respective bank. You may send email to [email protected] if you wish to pledge for loan.

Pledging of shares to get higher exposure:

In this process, you will get extra exposure for your trading.

  1. Important points to remember:
    1. List of scrips available for pledging under MAS: The list of scrips available for pledging under MAS has about 850 stocks in it. This list is decided as per TradeSmart internal risk policies. It will be reviewed periodically and updated accordingly.
    2. Charges: There shall be Rs 15 for pledging and Rs 15 for unpledging + GST charged per scrip per day irrespective of the quantity. So if you have pledged 100 quantity of Reliance and 200 quantity of ACC you will be charged Rs.30 (15*2) exclusive of the GST. The pledge charges will be debited from your ledger the day you place the pledge request. Similarly, the charges will be applicable for unpledging.
    3. Demat account: To avail MAS facility for your account, you should have a  online demat account.
    4. Selling Pledged shares: Pledge shares shall not be shown in holding and hence cannot sell directly without unpledging. We are working on this feature to allow soon.
    5. In case of any corporate action for pledged stocks the benefits of corporate action will be transferred to the demat account it is in. Hence, in case
      1. Dividends: In accordance with the provisions of Section 195 of the Income Tax Act, 1961, the dividends will be taxable. Since the share do not move out of demat account, the client can get the dividend directly in their primary bank account.
      2. Rights Issue: The rights entitlement benefit goes to the owner of the demat account where the stocks are held on the record date. In case you’d like to apply for the rights issue, you can do so without unpleding the shares. Because the shares are in your demat account only and are just marked as pledged (lien).
  2. Process to Pledge Shares:
    To pledge any scrips, you would require to login to BOX and request for pledge of shares. Your request would be processed in two working days.

Comments

  1. Bhushan

    Except TSO every other broker appears to do this process with online back office system. Please make most office courier requirements online enabled through back office.

    1. Trade Smart Online Article Author

      Hi Bhushan,
      Seems you got confused. We do provide online pledging of shares through our back office BOX. You are required to courier DIS for pledging shares only when you pledge shares for taking loan from bank etc… And not for getting higher exposure in the trading account that you have with us. Please refer our Margin Against Shares article for more information.

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