You can pledge or hypothecate your dematerialised shares against loan or credit facilities extended by a pledgee who also has an account with a DP
The pledge procedure
Pledgor fills in a form requesting the DP to pledge shares and hands it over to the DP
If the form is complete in all respects, the DP processes the form and generates a pledge / hypothecation instruction number for the request
Securities to the extent of the instruction are debited from the free or locked-in balances and credited as pledged balances of the pledgor so that they cannot be used for any transactions
The pledgee will submit a form to its DP to accept / reject the pledge / hypothecation request
If the pledgee accepts the request by the pledgor, the acceptance is communicated electronically to the pledgor's DP. Once the pledgee's DP confirms the
acceptance of the pledge, the pledgor cannot cancel the pledge / hypothecation order. The pledgee's DP executes the pledge / hypothecation request as per the instructions given
In case the pledgee rejects the pledge request, the pledgor's DP is intimated electronically. Now the securities which were earlier credited as pledged balances will be credited to free / locked-in balances
Once the loan is repaid by the pledgor, the pledgor initiates the closure of the plegde. The request for closure is transmitted electronically to the pledgee's DP. The pledgee's acceptance / rejection of the
request for closure of pledge is transmitted electronically to the pledgor's DP
If the pledge is closed, the securities will be reflected as free / locked-in balances
In case the pledgor defaults in repaying the loan to the pledgee, the pledgee instructs his DP to invoke the pledge / hypothecation
What you need to do
If you are a Pledgor
If you are a Pledgee
See to it that :
The pledge / hypothecation request form is complete in terms of agreement number, closure date, pledgee details and details of securities
The form submitted for closure of pledge / hypothecation is complete in all respects
The form for accepting / rejecting the pledge / hypothecation request is complete in all respects
The form for invoking the pledge / hypothecation request is complete in all respects
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