Pledging is a good way of raising money against your share balances. Now, you are having shares and you don’t want to sell them. Yet you need money. What do you do? The answer is you can pledge your shares. What is the process for pledging? Here is how you can do it…
If you want to pledge your shares with the bank then you will have to make an agreement with the bank or the financer as the case may be. After the agreement is done, an agreement number is mentioned in the Pledge Request Form which has to be sent to DP. This is called the PRF, which has to be approved and ratified by the DP.
Pledgor and the Pledgee must have a beneficial account with the same depository as the inter-depository pledge is presently not permitted. Remember, we are talking about the same depository, not same depository participant. Your accounts can be with two different DPs, but both must either be NSDL or both must be CDSL. It cannot be that one is NSDL account and the other is CDSL account.
DP department once verifies the request from their end & Initiate the Pledge creation. Then after Pledgee (Counterparty Account holder) requires to Accept/Confirm the pledge creation on the basis of Generated Pledge Order no. to complete the Pledged Transaction. Remember, that pledged shares remain in Pledgor’s demat account under the pledged status which was non-transferrable till Pledged shares are closed/Released.