Letter to BS: Rise in pledged shares by promoters puts Street on the edge

This refers to your article “Promoters' pledged share up 60%” (February 19). Pledging of shares is risky as share values are prone to market risks. Share appropriation as security for loans up to an average of 60 per cent will result in weak capital investment for promoters due to fluctuating share markets. There may be an abrupt fall in the value of shares in the stock market due to which their appropriation as security may be below par and even in some cases worthless. It, in the process, leads to capital erosion. Pledging of shares may appear to be an