What should I do if I want to pledge electronic securities?

The procedure is as follows:

1. Both you (pledgor) as well as the lender (pledgee) must have depository accounts

2. You have to initiate the pledge by submitting to Karvy the details of the securities to be pledged in a standard format

3. The pledgee has to confirm the request through Karvy. It is suggested that after creation of the pledge request, you may inform the pledgee and request him to confirm the request

4. Once this is done, your securities are pledged All financial transactions between the pledgor and the pledgee are handled as per usual practice outside the depository system.

How can I close the pledge after repayment of my loan?

After you have repaid your loan, you can request for a closure of pledge by instructing Karvy in a prescribed format. The pledgee on receiving the repayment will instruct Karvy accordingly for the closure of the pledge.

Whether pledgee account can be in a different DP?

Yes. The pledgee can have an account with a different depository participant of NSDL / CDSL .

Can I change the securities offered in a pledge?

Yes; if the pledgee [lender] agrees, you may change the securities offered in a pledge.

Who will receive dividend on the pledged securities?

Pledgor will continue to receive dividend on the pledged securities. The pledgee will get the benefits only if pledge is invoked and on record date the shares are in the pledgee's account.

How will the distribution of bonus shares for pledged shares happen?

The software in NSDL / CDSL has been modified to handle distribution of bonus entitlements through Automatic Corporate Action (ACA) Module. This works as follows:

The holdings as of the record date / book closure, (including those holdings which are pledged) are considered for computing bonus entitlements.

At the time of effecting the credit of bonus shares, the system checks whether pledge is still open or closed.

At the time of effecting the credit of bonus shares, the system checks whether pledge is still open or closed.

Where pledge orders are not closed / invoked or partially closed / invoked, the bonus entitlements in such cases are credited to the pledgor's account with pledge marked in favour of the pledgee.

If the pledge is closed/invoked fully, the bonus entitlements will be credited to the pledgor's account as free balances.