9911796707
TMI BlogSecurities Lending Scheme of Securities and Exchange Board of IndiaX X X X Extracts X X X X X X X X Extracts X X X X ..... approved intermediary for the purpose of borrowing of securities and as such, there would be no direct agreement between the lender and the borrower. The approved intermediary shall be entitled to lend the securities deposited by the lender to the borrower from time to time. The title (ownership) of the securities shall rest with the borrower who will be entitled to deal with or dispose of the securities so borrowed. The lender shall be entitled to receive, in consideration for the lending of the securities an agreed amount of fees for depositing the securities for the specified period. The agreements between the approved intermediary and the lender or borrower, as the case may be, shall provide for the following terms and conditions: (a) the period of depositing/lending of securities, (b) charges or fees for depositing/lending, (c) collateral securities for lending, (d) provisions for the return including premature return of the securities deposited or lent, and (e) mechanism for resolution of the disputes through arbitration. 3. The following taxation issue may arise in respect of transactions under the scheme of securities lending: W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is enclosed. Securities borrowing or lending can be undertaken by any person only through the approved intermediary registered with SEBI. Any person desiring to act as an approved intermediary has to make an application in the prescribed format along with the requisite registration fee. The application form and other details can be obtained from Division Chief (Secondary Market Department). Preliminary 1. (1) This scheme shall be called the Securities Lending Scheme, 1997. Applicability 2. (1) It shall come into force on 6th February, 1997. Definitions 3. (1) In this scheme, unless the context otherwise requires, (a) approved intermediary means a person duly registered by the Board under the guidelines/scheme through whom the lender will deposit the securities for lending and, borrower will borrow the securities; (b) Board means the Securities and Exchange Board of India (SEBI) established under section 3 of the Securities and Exchange Board of India Act, 1992; (c) borrower means a person who borrows the securities under the scheme through an approved intermediary; (d) corporate benefits shall include dividends (gross), r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lender. (6) The approved intermediary shall unless otherwise provided in the agreement with the lender, guarantee the return of the equivalent securities of the same type and class to the lender along with the corporate benefits accrued on them during the tenure of the borrowing. Even in case of failure of the borrower to return the securities or corporate benefits the approved intermediary shall be liable for making good the loss caused to the lender. (7) The approved intermediary may retain the securities deposited by the lender in its custody as a trustee on behalf of the lender. (8) The approved intermediary shall, in accordance with the terms of the agreement entered into with the lender, be entitled to lend the securities deposited by the lender to the borrower from time to time. (9) Under the scheme, the title of the securities lent to the borrower shall vest with the borrower and the borrower shall be entitled to deal with or dispose of the securities borrowed in any manner whatsoever. (10) The agreement between the borrower and the approved intermediary shall, inter alia, provide that the borrower shall have an obligation to return, the equivalent number of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the concerned authorities for initiation of appropriate action against the defaulter. Eligibility criteria for approved intermediary 5. No person shall act as an approved intermediary unless a certificate of registration has been obtained from the Board. For the grant of a certificate of registration the Board shall take into account the following: (a) whether the applicant is a person with minimum net worth of Rs. 50 crores; (b) if the applicant is a clearing house or a clearing corporation and it has the net worth specified by the Board after consulting the stock exchange; (c) whether the applicant has adequate infrastructure facilities like office space, equipment and manpower experienced in dealing in securities to effectively discharge its activities. Obligations and responsibilities of approved intermediary 6. An approved intermediary shall comply with the following obligations and responsibilities: (1) The approved intermediary shall abide by the scheme and the guidelines issued by the Board from time to time with respect to its activity of securities lending. (2) The approved intermediary shall comply with the equipment of eli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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