Realizable Securities Part4 (Advances General Information)

14 May 2014

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 Realizable Securities Part1 (Advances General Information)
Realizable Securities Part2 (Advances General Information)
Realizable Securities Part3 (Advances General Information)
Realizable Securities Part5 (Advances General Information)

Advances against Shares and Debentures of Joint stock Companies and Units of Mutual Funds

The Manager/Officer should ascertain.

1. That the shares are of reputed companies which are being quoted and traded regularly on the stock exchange and the amount to be advanced is to be ascertained form the card limit supplied by CO & market value net of stipulated margin. Lower of the two would be the amount to be sanctioned within the ceiling norms.
2. That the purpose of the advance is not speculative. 
3. That the shares are in marketable lots and mentioned in CO circular. 
4. That the partly paid shares are not accepted as security. 
5. That the share certificates do not disclose unauthenticated alteration. 
6. That the drawing power is revised periodically keeping in view the market rates. 
7. That the rate of interest charged and the margin stipulated are as per Head Office instructions. 
8. That the advances are granted with stipulated repayment programme and are not allowed to continue indefinitely. 
9. That the operations in the account are satisfactory in case of cash credit limits. 
10. That in case of advances against shares in the name of third party consent letter to pledge the shares from the said party is obtained, in addition to valid blank transfer deeds. 
11. That the branch has obtained adequate number of valid transfer deeds duly signed and witnessed. 
12. The shares to be pledged should preferable be in Damat form. Now a days sale transactions take place in Demat form only. This helps in traferring the pledged shares to Bank’s/Branch’s Demat account for further disposal/sale and recovery of our dues. 
13. Both pledge and pledgee should have Demat account in same Depository for easy transferability.
14. Finance to share & stock brokers are entertained at select branches only.

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Post Category : Advances General Information , Business , Core Banking System