InvestorQ : What is single-scrip lending in loan against shares (LAS)?
Indrajeet Kashyap made post

What is single-scrip lending in loan against shares (LAS)?

Pratik vyas answered.
3 years ago

In loan against shares (LAS), a borrower gets a loan by pledging his stocks/shares. Usually borrowers, pledge their entire portfolios of which the lending company selects an approved set of shares to be lent against.

However, under single-scrip lending, one can avail loan by pledging the shares of one company. As expected, banks will permit single-scrip lending only for high quality and liquid scrips. The lender will not take this risk with lesser-known companies.

With other scrips, the banks may demand shares from other companies too. For instance, HDFC Bank requires minimum two scrips (shares of two companies). Additionally, the single scrip shall not exceed 65% of the drawing power (overdraft facility).