Margin Funding Retail | Financial Services Companies In India
Loan Against listed securities

Loan Against listed securities Services

Prabhudas Lilladher Financial Services Private Limited. is an RBI approved NBFC arm of PL group. It offers margin funding, finance against shares & securities to meet fund requirements of various categories of borrowers that includes Retail & HNI, HNIs, HUFs and Corporate entities. It also provides finance for investment in primary market issues and Mutual Fund Schemes.

Our margin finance service provides investors with an opportunity to invest more than they could by using their own money and increase the potential returns. Margin Finance trading is granted against pre-approved list of securities, subject to predefined haircut for margin. Through margin finance facility, investors can raise finance to purchase additional securities without selling their long-term investments. Under this facility, the investors need to either pay a part of the total purchase value or pledge his existing approved securities as margin, while the balance purchase value is being funded by NBFC. Margin Financing is thus known as ‘gearing’ of the investment portfolio.

Benefits of Margin Financing

Instant liquidity without selling long-term investments: Investors don’t have to sell their long term investments to en-cash their value. Investor can use shares currently held in the portfolio to take larger positions in the market.

Increased Investment Capacity:Margin lending can be used as a simple and flexible option to leverage up/gear up investor’s portfolio, allowing them to increase their overall stock market investment with a relatively small amount of their own money.

Diversification:Having more money to invest means you can spread your portfolio across a variety of shares and securities. Diversification can reduce the investment risk of Investor’s portfolio and make the returns less volatile.

Dividend & Other corporate benefits: Investor not only retains the ownership but also continue to avail of the shareholder benefits such as dividends, bonuses, rights, etc.

Flexibility in utilization of limits:Investor can prepay since this facility is in the nature of a overdraft facility. No prepayment charges are charged. Interest is charged only for the days the loan amount is utilized.

Buying limits are set daily as per the unutilized drawing power and Investor can purchase shares upto the buying limit. The shares in the portfolio are revalued on a daily basis and drawing power is updated accordingly. Any appreciation in the value of the securities given as margin would automatically allow enhancement in drawing power.

Margin Financing is suitable for investors who

plan to invest in a portfolio of Approved Securities and who expect the net return on their investments to exceed the cost of borrowing over their planned investment horizon; - own an existing portfolio of Approved Securities and who would like to supplement or diversify their investments without selling their existing portfolio; or

Understanding and minimizing risk

While borrowing to invest more money in shares and securities may increase potential returns, the most common risks associated with margin finance is Margin Call (i.e. reduction in loan to security value ratios) which occurs as a result of market volatility and/or high gearing levels. Risks can be minimized if

  • investment portfolio is diversified across number of sectors and across the large caps and midcaps to reduce the risk of fall in one particular sector.
  • portfolio is evaluated and churned on regular basis by booking profits and keeping stop losses.

Other Products offered

Mutual Fund financing: Existing investments can be leveraged and investible funds can be enhanced to capitalize on new investment opportunities.

IPO financing: IPO loans can be availed by investing only the margin amount with PLF financing the balance application amount at agreed rates of interest and conditions. The exclusive IPO financing scheme provides a single window clearance for application, banking and follow-up.

Promoters Funding: Fund requirements of promoters of well-managed corporates for various needs like financing for business growth, creeping acquisition and take-over financing can be availed through Promoters Funding.

General Interest Rates on Loans:

Interest rates depend on risks like credit worthiness of the borrower, security offered, security margins available, usage of funds by the borrowers, cost of raising funds and prevailing market conditions.

For more information on PL's Loan Against listed securities services, contact:

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