Pledged shares are stocks offered as collateral to secure funding. Held in the owner’s Demat account, they cannot be sold or transferred until repayment and release.
Share pledging marks shares as collateral, restricting sale but retaining ownership rights. Lenders monitor prices, demand more collateral if needed & may sell shares in case of default.
To pledge shares, submit a pledge request through your depository or bank with the required documents. The shares are then marked pledged after the lender’s approval.
Pledging shares offers funding without ownership dilution, retains control & acts as collateral, but poses risks if share prices drop significantly. Ideal for quick financing.
Pledge involves movable assets, such as shares or stocks, while a mortgage involves immovable assets, like real estate or land.
In a pledge, ownership remains with the borrower, whereas in a mortgage, conditional ownership is transferred to the lender until full repayment.
Pledge involves shares, stocks, or jewelry, while a mortgage involves houses, land, or commercial property.
Pledge requires repayment to retrieve collateralized assets, whereas a mortgage requires repayment for the borrower to regain full ownership of the property.
Pledge is often used for short-term capital raising, while mortgage is typically used for larger, long-term financial arrangements.
Pledging shares offers quick capital access without equity dilution, retaining control, enhancing liquidity & providing flexible financing for short-term business needs.
Pledging shares carries risks of forced liquidation, increased financial strain, stock price decline, and damage to investor confidence, especially in volatile markets.
Promoters pledge shares to raise capital for business needs or personal expenses, maintaining control. However, high pledging can signal financial stress & affect stock prices.