Stock Lending and Borrowing, or SLB, is a system that lets investors lend their shares<\/a> to others for a fee. The borrower uses the shares for a short period, then returns the same number of shares. The lender earns income on shares that would otherwise sit idle in their demat account<\/a>.<\/p>\n This guide explains how SLB works in India, who can use it, and the key points investors should know.<\/p>\n SLB is a regulated mechanism offered by stock exchange<\/a>s through their clearing corporations. It allows one investor to lend shares to another for a fixed period in return for a lending fee.<\/p>\n The lender gets the shares back at the end of the contract. The borrower uses the shares for trading<\/a> needs, such as short selling<\/a> or settlement.<\/p>\n The SLB process follows a few simple steps:<\/p>\n The clearing corporation acts as the counterparty. This reduces default risk for both sides.<\/p>\n The SLB segment is open to:<\/p>\n You need an SLB-enabled trading account<\/a> with a broker<\/a> that supports this service.<\/p>\n Lending shares can be a useful way to earn extra income:<\/p>\n The lending fee depends on market demand for the stock.<\/p>\n Borrowers also gain in several ways:<\/p>\n This adds flexibility to trading and helps the market work better overall.<\/p>\n In India, the National Stock Exchange and BSE<\/a> offer multiple tenures. These usually run up to 12 months. The contract has clear roll-over and recall rules.<\/p>\n Short tenures suit short selling needs. Long tenures suit institutional strategies.<\/p>\n Corporate actions like dividend<\/a>s, bonus issue<\/a>s, and stock split<\/a>s are handled with care:<\/p>\n This ensures the lender does not lose any benefit that comes with the share during the lending period.<\/p>\n Lenders earn a fee, often quoted as a yearly rate. Borrowers pay this fee plus brokerage and other charges. The price depends on demand for that stock in the SLB market.<\/p>\nWhat Is Stock Lending and Borrowing?<\/h2>\n
How SLB Works in India<\/h2>\n
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Who Can Use SLB?<\/h2>\n
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Benefits of SLB for Lenders<\/h2>\n
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Benefits of SLB for Borrowers<\/h2>\n
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SLB Tenures Available<\/h2>\n
Corporate Actions During SLB<\/h2>\n
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SLB Fees and Costs<\/h2>\n