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HDFC Bank launches loan against shares in minutes: How it works

Ties up with NSDL for complete digitisation of loan mechanism

Anup Roy  |  Mumbai 

HDFC Bank branch office in Mumbai

Ltd is offering loans against shares in about two-three minutes by completely digitising the loan mechanism.

For this, the bank has tied up with National Securities Depository Ltd (NSDL). Shares dematerialised by and executed through demat account could be used for pledging. This is a first-of-its-kind initiative in India and probably the first in the world as well. and had consulted the Reserve Bank of India (RBI) before developing the product.

"There would probably be no second lender who has managed to put this (product) on the table. We are probably the first to do it and therefore, it is a great day for the country as well," said Arvind Kapil, country head of unsecured, home and mortgage loans of the bank.

An customer can now login to the bank website and pledge her shares, dematerialised by NSDL, and can get instant loans, deposited in a freshly opened current account. The customer doesn't have to fill any form or visit any branch of The bank, on its part, has identified more than 400 widely traded shares that are acceptable for pledging. The loan can be roughly 50 per cent of the value of shares pledged or more, depending on the credibility and float of the underlying company. The maximum regulatory ceiling for the loan is Rs 20 lakh.

Earlier, the process was a lengthy one that required the customer to visit the bank branch and fill up forms, which would then take days to process.

The rate of interest charged would be 10.5 per cent, but the bank is open to reducing the interest as scale builds up, said Kapil.

As per data, private control about Rs 5,000-6,000 crore of the market for loans against shares. Half of this is contributed by HDFC Bank, Kapil said.

The portfolio of public sector is not readily available, but it could be another Rs 5,000-6,000 crore.

is growing the loan against share portfolio at 40 per cent per year, and expects the digital initiative to boost the growth by another 30-40 per cent, Kapil said.

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HDFC Bank launches loan against shares in minutes: How it works

Ties up with NSDL for complete digitisation of loan mechanism

HDFC Bank Ltd is offering loan against shares in about two-three minutes by completely digitizing the project. For this, the bank tied up with National Securities Depository Ltd (NSDL). Shares dematerialized by the NSDL and executed through HDFC Bank demat account could be utilized for the pledging purpose. This is most definitely first of its kind initiative in India and probably the first in the world also. HDFC Bank and NSDL consulted the Reserve Bank of India (RBI), country's central bank, before developing the product. "There would probably be no second regulator who has managed to put this (product) on the table. We are probably the first to do it and therefore, it is a great day for the country as well," said Arvind Kapil, country head of unsecured, home and mortgage loans of the bank. A HDFC Bank customer can now login to the bank website and pledge her shares, dematerialized by NSDL, and can get instant loans, deposited in a freshly opened current account. The customer ...

Ltd is offering loans against shares in about two-three minutes by completely digitising the loan mechanism.

For this, the bank has tied up with National Securities Depository Ltd (NSDL). Shares dematerialised by and executed through demat account could be used for pledging. This is a first-of-its-kind initiative in India and probably the first in the world as well. and had consulted the Reserve Bank of India (RBI) before developing the product.

"There would probably be no second lender who has managed to put this (product) on the table. We are probably the first to do it and therefore, it is a great day for the country as well," said Arvind Kapil, country head of unsecured, home and mortgage loans of the bank.

An customer can now login to the bank website and pledge her shares, dematerialised by NSDL, and can get instant loans, deposited in a freshly opened current account. The customer doesn't have to fill any form or visit any branch of The bank, on its part, has identified more than 400 widely traded shares that are acceptable for pledging. The loan can be roughly 50 per cent of the value of shares pledged or more, depending on the credibility and float of the underlying company. The maximum regulatory ceiling for the loan is Rs 20 lakh.

Earlier, the process was a lengthy one that required the customer to visit the bank branch and fill up forms, which would then take days to process.

The rate of interest charged would be 10.5 per cent, but the bank is open to reducing the interest as scale builds up, said Kapil.

As per data, private control about Rs 5,000-6,000 crore of the market for loans against shares. Half of this is contributed by HDFC Bank, Kapil said.

The portfolio of public sector is not readily available, but it could be another Rs 5,000-6,000 crore.

is growing the loan against share portfolio at 40 per cent per year, and expects the digital initiative to boost the growth by another 30-40 per cent, Kapil said.

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Business Standard
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HDFC Bank launches loan against shares in minutes: How it works

Ties up with NSDL for complete digitisation of loan mechanism

Ltd is offering loans against shares in about two-three minutes by completely digitising the loan mechanism.

For this, the bank has tied up with National Securities Depository Ltd (NSDL). Shares dematerialised by and executed through demat account could be used for pledging. This is a first-of-its-kind initiative in India and probably the first in the world as well. and had consulted the Reserve Bank of India (RBI) before developing the product.

"There would probably be no second lender who has managed to put this (product) on the table. We are probably the first to do it and therefore, it is a great day for the country as well," said Arvind Kapil, country head of unsecured, home and mortgage loans of the bank.

An customer can now login to the bank website and pledge her shares, dematerialised by NSDL, and can get instant loans, deposited in a freshly opened current account. The customer doesn't have to fill any form or visit any branch of The bank, on its part, has identified more than 400 widely traded shares that are acceptable for pledging. The loan can be roughly 50 per cent of the value of shares pledged or more, depending on the credibility and float of the underlying company. The maximum regulatory ceiling for the loan is Rs 20 lakh.

Earlier, the process was a lengthy one that required the customer to visit the bank branch and fill up forms, which would then take days to process.

The rate of interest charged would be 10.5 per cent, but the bank is open to reducing the interest as scale builds up, said Kapil.

As per data, private control about Rs 5,000-6,000 crore of the market for loans against shares. Half of this is contributed by HDFC Bank, Kapil said.

The portfolio of public sector is not readily available, but it could be another Rs 5,000-6,000 crore.

is growing the loan against share portfolio at 40 per cent per year, and expects the digital initiative to boost the growth by another 30-40 per cent, Kapil said.

image
Business Standard
177 22