SBI - Loan Against Shares\ Debentures

LOAN AGAINST SHARES \ DEBENTURES

Do you need urgent cash but you don't wish to sell or liquidate your holding of shares?

Leverage your investments in shares, debentures, public sector bonds and Government securities for loans to meet unforeseen expenses!! You need not miss out on the next stock market boom!!

Avail of loans up to Rs.20.00 lacs against your shares/debentures to enable you to meet contingencies, personal needs or even for subscribing to rights or new issue of shares.

Note: Loan will not be sanctioned for
1. speculative purposes
2. inter-corporate investments or
3. acquiring controlling interest in company/companies.

Enjoy the SBI advantage

*Low interest rates. Further, we charge interest on a daily reducing balance!!
*Low processing charges; only 1% of loan amount - compare with 1-3% of others.
*No hidden costs or administrative charges..
* No prepayment penalties. Reduce your interest burden and optimally utilize your surplus funds by prepaying the loan.

The Scheme :

Eligibility :

This facility is available to our existing individual customers enjoying a strong relationship with SBI. This loan could be availed either singly or as a joint account with spouse in 'Either or Survivor'/ 'Former or Survivor' mode. It is offered as an Overdraft or Demand Loan.

The facility is available at 50 select centers.

Salient Features

Purpose :

For meeting contingencies and needs of personal nature. Loan will be permitted for subscribing to rights or new issue of shares / debentures against the security of existing shares / debentures. Loan will not be sanctioned for (i) speculative purposes (ii) inter-corporate investments or (iii) acquiring controlling interest in company / companies.

Loan Amount :

You can avail of loans up to Rs 20.00 lacs against your shares/debentures.

Documents Required:

You will be required to submit a declaration indicating :

* Details of loans availed from other banks/ branches for acquiring shares/ debentures.
*Details of loans availed from other banks/ branches against security of shares/ debentures Margin.

You will need to provide a margin amount of 50% of the prevailing market prices of the shares/ non-convertible debentures being offered as security. (The market prices refer to the prices in the Stock Exchanges as reported in the Economic Times.)

Interest :

At SBAR Floating i.e. 13.00% p.a.

Repayment Schedule :

To be liquidated in maximum period of 30 months through a suitable reducing DP programme.

In case of a default or if the outstanding is over Rs.20.00 lacs, the shares/debentures will be transferred in the name of the Bank.

Security:

Pledge of the demat shares/debentures against which overdraft is granted.

Coverage:

Scheme is available at select branches at 50 centres.

Essential Parameters for acceptance of shares as security

(i) The equity shares and debentures offered as security should be fully paid. Preference shares will not be acceptable as security

(ii) The shares/ debentures offered as security must be in demat form.

(iii) The share/ debenture should be of a company listed in BSE 100 Index, except those of SBI (list of BSE 100 Index companies is available on www.bseindia.com).

(iv) The market price of the security should not have fallen below par for preceding 52 weeks.

(v) The market price of the security should not be as variance with the arithmetical average of preceding 52 weeks high and low by more than 25% in downward direction.

(vi) ( P/E ratio of the company should not exceed 40 as published in Economic Times. In case P/E ratio is not available the shares/ debentures of the company should not be accepted as security.

(vii) The total number of shares of the company traded on NSE and BSE should exceed 25000 on the day of financing and on each preceding 2 days.

(viii) Security where the market price 52 week high is 4 times of the 52 week low should not be accepted. (Information related to 52 weeks high and low, P/E ratio and traded volumes in NSE and BSE is available in Economic Times).

Rating :
Debentures must have been rated 'AA+' or higher by CRISIL or equivalent rating by any other reputed rating agency like ICRA etc.

Repayment :
To be liquidated in maximum period of 30 months through a suitable reducing DP programme.

Declaration:

The applicant will have to submit a declaration indicating:·

#details of loans availed of by them from other banks/ branches for acquiring shares/ debentures

#details of loans availed from other banks/ branches against security of shares/ debentures

Transfer of shares

Shares/debentures will be transferred in the name of the Bank when there is a default and the outstanding is over Rs.20 lacs.

Documentation
#Application for overdraft limit against security of shares/ debentures indicating details of shares (i.e. ISIN of the company whose shares/ debenture are offered as security, number of shares/ debenture offered as security) along with borrowers DP ID and DP account number.

#Applicant has to submit consent letter agreeing to regularize the account/ replenish the margin shortfall, on account of adverse market price variation, immediately on receipt of notice from the branch. Applicant will also submit consent to the condition that in the event of his failure to regularize the account immediately, Bank has the right to get the security transferred in its name and arrange for its sale, without any further reference to him. The Bank shall exercise this option without prejudice to its rights to recover the dues by other means also.

#DP Note and DP Delivery letter.

#Irrevocable Letter of Undertaking addressed to the Bank signed by all holders of the shares.

#Dividend collection mandate(s).

#Either or Survivorship Letter(if applicable).

Security :
Pledge of the demat shares/ debentures against which overdraft is granted.

Nature of loan :
Is Overdraft / Demand Loan with the Repayment programme maximum 30 months.

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