Hdcf Bank Cuts Margin For Loans Against Shares

HDFC Bank has reworked its loans against shares scheme, put in bids for clearing bank status at the Bombay, Calcutta and Ahmedabad stock exchanges, and plans to extend its depository services in a bid to give a major thrust to capital market products.

The minimum margin for advances against shares in the case of certain liquid scrips in the A1 category has now been reduced to 40 per cent, said Aditya Puri, managing director, HDFC Bank. This is in the light of the recent credit policy announcement which has permitted banks to reduce the minimum margin specified in case of loans given against shares from 50 per cent to 25 per cent.

 

The bank is also offering such loans at an interest rate of one percentage point less in case of dematerialised shares, and a concession in processing fee of half a per cent.

The bank has also sent a proposal to the National Stock Exchange for loans to meet the working capital requirements of brokers. Brokers usually have a problem with cash flows, especially in the case of institutional trading where they get paid only after delivery of shares by the custodian. According to the proposal, the working capital needs of brokers will be assessed according to their turnover. The loan facility will be secured by the shares and the margin prescription will be lower in case of highly liquid scrips. The interest rate on such loans will be set at 200 basis points above the prime lending rate of the bank which is currently at 16 per cent. The bank, which acts as a clearing and settling bank for the NSE and permitted securities segment of the OTCEI, had recently entered into a memorandum of understanding with the Ahmedabad Stock Exchange for clearing services. We are also putting in bids for the Calcutta, Delhi and Bombay Stock Exchanges, said Puri.

The bank also plans to extend its depository services to these regions.