InvestorQ : How is the lending fees adjusted in the event of foreclosure?
Arti Chavan made post

How is the lending fees adjusted in the event of foreclosure?

Answer
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1 year ago


In case of corporate actions (other than Stock split & Dividend) all existing positions in SLBS are foreclosed on the Ex-Date. The lenders are required to repay proportionate amount of lending fees received from borrowers. The lending fees for the balance period shall be collected on pro rata basis from the lenders based on the lending fees received by them. The amount so collected shall be passed on to the borrowers in the ratio of their contribution to the pro rata lending fees receivable by them based on the lending fees paid by them. The lending fee will be brought by the lender on the foreclosure settlement date and will be passed on to the borrower.

However in case of foreclosure where the corporate action is announced upfront by NSE Clearing before the transaction has been executed there will be no adjustment of lending fee. Market participants shall accordingly quote lending fee for the shorter transaction cycle.