Last Updated on March 27, 2026 1:33:39 PM by Vivek Makwana
What is SLBM? India’s Stock Lending System Explained — With Real Charges, Calculator & Broker Guide
Securities Lending and Borrowing Mechanism (SLBM) lets you earn passive income from shares you already own — without selling them. यहाँ पूरी जानकारी हिंदी में भी मिलेगी।
SLBM (Securities Lending and Borrowing Mechanism) is a SEBI-regulated system where you temporarily lend your idle demat shares to a borrower (usually a short-seller or arbitrageur) for a fixed period and earn a lending fee in return. Your shares are returned at the end of the contract. NSE Clearing Limited (NSCCL) guarantees every transaction — there is no counterparty default risk for you.
Simple analogy: It is like renting out your flat while you’re on a long trip. Your property stays yours, you earn rent, and you get it back when the tenant leaves.
SLBM को India में Securities Lending and Borrowing Mechanism कहते हैं। SEBI ने इसे regulate किया है। आप अपने idle shares temporarily किसी दूसरे investor को “किराये पर” दे सकते हैं — और बदले में lending fee (5%–15% सालाना तक) earn करते हैं — shares बेचे बिना।
How SLBM Works — Step by Step
The entire process runs through NSE’s platform automatically. Here is what happens from the moment you place a lending order:
You Offer Your Shares
You go to your broker’s SLB section, select the stock, enter quantity, choose lending period and Series (A or B), and set your minimum acceptable annualised fee. The order goes live on NSE’s SLB order book.
✓ Market hours: 9:15 AM – 5:00 PM (all trading days)NSCCL Matches the Order
NSE Clearing Limited (NSCCL) acts as the central counterparty. It automatically matches your lending order with a borrower’s order. This process is transparent and exchange-guaranteed.
✓ No counterparty default risk — NSCCL guarantees settlementLending Fee Credited Upfront
Once matched, the full lending fee for the agreed period is credited to your account immediately. You do not wait until contract expiry to receive the fee.
✓ Fee is received before shares are even transferredShares Move to Borrower’s Demat
Your shares are temporarily transferred to the borrower. Your ownership of the shares does not change — only temporary possession transfers. This triggers the DP debit charge.
✓ Ownership remains yours throughout the periodContract Expires — Shares Return
On contract expiry (first Tuesday of the month for that series), the borrower returns the shares. NSCCL manages the settlement automatically. No manual action required from you.
✓ Fully automatic — no follow-up neededRavi holds 1,000 shares of Infosys at ₹1,500/share (₹15 lakh value). He has no plan to sell for 2 years.
Priya is a short-seller who expects Infosys to fall next month. She borrows Ravi’s 1,000 shares through SLBM at a 2% monthly lending fee.
Ravi receives: ₹30,000 (2% of ₹15 lakh) upfront. His shares return after the contract period. SLBM charges: DP charge ~₹15.34 + 18% GST, plus 20% + 18% GST processing fee on ₹30,000 = ₹7,080. Net income: ~₹22,905.
Priya can: Sell borrowed shares, potentially buy them back at a lower price, profit from the difference, and return shares to Ravi.
SLBM Charges — The Real Math After All Fees
This is the section most guides skip. Before deciding if SLBM is worth it for you, you need to understand the complete charge structure. Gross lending rate ≠ what you actually earn.
| Charge | Amount | When Applicable | Notes |
|---|---|---|---|
| DP Debit Charge | ₹13 + 18% GST = ₹15.34 per debit (₹12.75 + 18% GST if primary holder is female) | Every time shares move from your demat for settlement | Zerodha rates; varies slightly by broker |
| Processing Fee (Broker) | 20% + 18% GST = 23.6% of lending fee | On completed orders — deducted from your lending income | Applies to both lender and borrower side at Zerodha |
| Income Tax | As per your income slab (5% / 20% / 30%) | At time of filing ITR | Classified as “Income from Other Sources” |
| STT | Not applicable on SLB transactions | — | ✓ No STT benefit to lenders |
| Exchange Charges | Minimal — built into the spread | — | Negligible for most retail lenders |
Net Yield After All Charges — Example
Assume you lend ₹5,00,000 worth of shares at 10% annualised rate for 1 month in the 30% income tax slab:
Effective annualised net yield ≈ 5.3% (for 30% slab). For 20% slab it is ~6.3%, for 5% slab ~7.5%. Still better than most savings accounts — but plan with net numbers, not gross rates.
Who Uses SLBM and Why?
🏦 You as Lender
- Extra income without selling shares
- Ownership stays with you throughout
- Dividends equivalent is compensated
- Recall shares early if needed
- Exchange-guaranteed — no default risk
- Fee credited upfront
📈 Borrowers (Short-Sellers / Arbitrageurs)
- Borrow shares to short-sell (SEBI compliant)
- Exploit F&O arbitrage opportunities
- Avoid physical delivery failures in F&O
- Access hard-to-borrow stocks
How Much Can You Realistically Earn?
Lending rates are driven by supply and demand. Stocks with high short-selling interest or arbitrage demand command higher rates. Rates fluctuate every contract cycle.
| Portfolio Value Lent | Lending Rate (p.a.) | Gross Monthly | Gross Annual | Approx. Net Annual (30% slab) |
|---|---|---|---|---|
| ₹1,00,000 | 5%–10% | ₹417–₹833 | ₹5,000–₹10,000 | ₹2,600–₹5,200 |
| ₹5,00,000 | 5%–10% | ₹2,083–₹4,167 | ₹25,000–₹50,000 | ₹13,000–₹26,000 |
| ₹10,00,000 | 5%–10% | ₹4,167–₹8,333 | ₹50,000–₹1,00,000 | ₹26,000–₹52,000 |
| ₹25,00,000 | 5%–10% | ₹10,417–₹20,833 | ₹1,25,000–₹2,50,000 | ₹65,000–₹1,30,000 |
Net Annual figures are approximate after 23.6% broker processing fee and 30% income tax. Use the calculator above for your exact numbers. Actual lending rates vary by stock, month, and market conditions.
Series A vs Series B — Which Should You Choose?
This is something no other guide explains clearly. Every SLB order requires you to choose a Series. The choice affects what happens during company meetings.
📋 Series A
- Contract is automatically foreclosed (terminated early) if the company holds an AGM or EGM during the lending period
- Shares are returned to you before the meeting
- Your lending fee is proportionally adjusted
- Borrower also gets notice and contract ends
- Choose if: You care about company voting and want shares back automatically
📋 Series B
- Contract does NOT foreclose during AGM/EGM
- Shares remain with borrower through the meeting
- You do not get to vote at that AGM/EGM
- Contract runs to normal expiry — maximum income
- Choose if: You only care about income and not company meetings
Can I Lend Pledged or Margined Shares?
This creates a trade-off: you can earn margin benefit (by pledging) OR lending fee (via SLBM), but not both on the same shares at the same time. For shares you have no plan to use as margin, SLBM is the better use. For active F&O traders who need those shares as margin, pledging is more valuable.
Which Stocks Are Eligible? And How to Find High-Demand Ones
Only stocks on the NSE/BSE approved SLB list can be lent — generally stocks in the F&O (Futures & Options) segment. This includes most Nifty 50 and Nifty 100 stocks.
How to Check the Live Approved List
- Go to nseindia.com → Market Data → Securities Lending & Borrowing
- The page shows a live order book with annualised yield %, volume, and open positions for all eligible stocks
- Look at the Annualised Yield column — stocks with higher yields have more borrower demand
- Check Open Positions — higher open positions mean more active contracts, better liquidity
- Also check Lot Size from NSE’s contract specifications before placing your order
Best Bid (Qty/Price): Borrowers willing to borrow at this rate — if you lend at or below this price, you’ll get matched quickly.
Best Offer (Price/Qty): Other lenders offering at this rate — if you want to match faster, offer near the best offer.
Annualised Yield %: Last traded lending rate annualised — this is your benchmark for setting your fee.
Open Positions: Number of active contracts — higher means more liquidity and easier to recall early.
How to Start Lending — Step by Step
Confirm Your Broker Supports SLBM
Zerodha, HDFC Securities, ICICI Direct, Kotak Securities, Axis Securities all support SLBM. Groww and Upstox have limited or no SLBM support. Check with your specific broker.
One-Time SLBM Activation
Zerodha: Login to Console (console.zerodha.com) → Go to User Profile → Enable the SLB Segment.
HDFC Securities: Submit the SLB privilege form online at hdfcsec.com or at a branch.
ICICI Direct: Request via customer care or the trading platform settings.
Check Eligible Stocks and Lot Sizes
Minimum lot size varies by stock — typically 500 or 1,000 shares. You need to hold at least one complete lot. For Zerodha, the minimum lending order value is ₹1 lakh. Check NSE’s approved list and lot sizes before proceeding.
✓ Minimum ₹1 lakh order value at ZerodhaCheck Live SLB Rates on NSE
Go to NSE’s Securities Lending & Borrowing market watch page and note the current annualised yield for your target stock. Set your lending fee at or slightly below the current best bid to get matched faster.
Place the Lending Order
In your broker’s SLB section: Select stock → Enter quantity → Choose Series A or B → Select expiry month → Enter minimum acceptable annualised rate → Submit. NSCCL will match your order automatically.
✓ Fee credited upfront once matchedMonitor and Optionally Recall
You can place a recall request if you need your shares back before expiry (e.g., you want to sell them). Recall takes exchange-specified time — shares are not returned instantly. Plan your recall requests 2–3 days before you need the shares.
⚠ Early recall is possible but not immediateBroker Comparison — SLBM Support in India
| Broker | SLBM Available | Min. Lending Value | Min. Borrowing | DP Charge | Processing Fee | Activation |
|---|---|---|---|---|---|---|
| Zerodha | ✓ Yes | ₹1,00,000 | 500 shares | ₹13 + 18% GST | 20% + 18% GST on fee | Online via Console |
| HDFC Securities | ✓ Yes | Check with broker | Check with broker | Check with broker | Check with broker | Online or Branch form |
| ICICI Direct | ✓ Yes | Check with broker | Check with broker | Check with broker | Check with broker | Platform settings |
| Kotak Securities | ✓ Yes | Check with broker | Check with broker | Check with broker | Check with broker | Contact customer care |
| Groww | ✗ Not Available | — | — | — | — | Not supported |
| Upstox | ~ Limited | Verify with broker | — | — | — | Verify with broker |
| Angel One | ~ Verify | Verify with broker | — | — | — | Verify with broker |
⚠ Broker charges change periodically. Always verify current rates directly from your broker’s official charge schedule before placing an order.
What High SLB Rates Signal About a Stock — Advanced Insight
This is an insight that sophisticated institutional investors use, rarely discussed in retail finance blogs. SLB rates are a real-time measure of short-selling demand.
If a stock has maintained very high SLB rates for 2–3 months and then the rate suddenly drops significantly, it may indicate that short-sellers are covering their positions — they are buying back shares (returning borrowed shares). This can be an early bullish signal for the stock price. Savvy investors monitor SLB rate trends on NSE’s SLB market watch page alongside other indicators.
Corporate Actions While Your Shares Are Lent
What happens to dividends, bonuses, splits, and rights issues when your shares are in a borrower’s demat?
| Corporate Action | What Happens to Lender | Action Required |
|---|---|---|
| Dividend | Borrower receives dividend (shares are in their demat on record date). NSCCL ensures lender receives equivalent compensation amount. | None — automatic compensation |
| Bonus Issue | Borrower gets bonus shares. NSCCL ensures lender is compensated with equivalent bonus shares or cash equivalent. | None — exchange compensates |
| Stock Split | Borrower holds shares on split record date. Contract is adjusted proportionally (more shares at lower price). Lender is compensated equivalently. | None — proportional adjustment |
| Rights Issue | Lender does NOT automatically receive rights entitlement since shares are not in their demat on record date. | ⚠ Recall shares BEFORE rights record date if you want to apply |
| Buyback / Open Offer | Lender cannot participate in buyback since shares are with borrower during the offer period. | ⚠ Recall shares before buyback record date |
| AGM / EGM Voting | Series A: Contract forecloses — shares returned. Series B: Shares stay with borrower — lender cannot vote. | Series A: Auto. Series B: Recall manually if you want to vote |
Tax Treatment of SLBM Income — Detailed Guide
SLBM lending fee is classified under the Income Tax Act as “Income from Other Sources” — the same category as bank interest income, not as capital gains or business income.
Tax Calculation Example — Three Slabs Compared
Assume ₹60,000 gross annual lending income:
| Tax Slab | Gross Fee | Broker Charges (~23.6%) | Net Before Tax | Income Tax | Net Take-Home | Eff. Yield on ₹10L @ 6% |
|---|---|---|---|---|---|---|
| 0% (below exemption) | ₹60,000 | ₹14,160 | ₹45,840 | ₹0 | ₹45,840 | 4.58% |
| 5% Slab | ₹60,000 | ₹14,160 | ₹45,840 | ₹2,292 | ₹43,548 | 4.35% |
| 20% Slab | ₹60,000 | ₹14,160 | ₹45,840 | ₹9,168 | ₹36,672 | 3.67% |
| 30% Slab | ₹60,000 | ₹14,160 | ₹45,840 | ₹13,752 | ₹32,088 | 3.21% |
SLBM vs Fixed Deposit vs Dividends — Full Comparison
| Feature | SLBM | Fixed Deposit | Dividends | Debt Mutual Fund |
|---|---|---|---|---|
| Gross Annual Return | 5%–15%+ | 6.5%–7.5% | 1%–3% | 6%–8% |
| Net Return (30% slab) | 3%–8% | 4.6%–5.3% | 0.7%–2.1% | 4.2%–5.6% |
| Capital at Risk | Share price risk remains | None (insured up to ₹5L) | Share price risk | Low — credit/rate risk |
| Liquidity | Medium (recall with lead time) | Low (lock-in period) | High (sell any time) | High |
| Upside Participation | Yes — you still own shares | No | Yes | No |
| Tax Classification | Income from Other Sources | Income from Other Sources | Income from Other Sources (above ₹5,000) | Capital Gains |
| Who Should Use | Long-term equity investors with Nifty 50/100 stocks | Anyone — no market exposure needed | Dividend-focused investors | Conservative investors |
| Minimum Amount | ₹1 lakh (Zerodha) | ₹1,000+ | Any amount | ₹500 (SIP) |
Risks and Important Considerations
| Risk / Limitation | Severity | Mitigation |
|---|---|---|
| Stock Price Decline During Lending | High (if stock falls sharply) | Lending fee does not protect against capital loss. Only lend stocks you have strong conviction in. |
| Not All Stocks Are Eligible | Medium | Only F&O-eligible stocks qualify. Small/mid cap portfolio holders may have limited lending options. |
| Recall Is Not Instant | Medium | If you need to sell urgently, recall takes time. Do not lend shares you may need to sell within the next few weeks. |
| Cannot Vote at AGM (Series B) | Low (for most retail investors) | Use Series A contracts or recall before AGM record date if voting matters to you. |
| Lending Fee is Not Guaranteed | Low-Medium | If no borrower matches your order, you earn nothing. Not all eligible stocks have active borrower demand. |
| Counterparty Default | None (NSCCL Guaranteed) | NSCCL acts as central counterparty — borrower default risk is fully absorbed by the exchange. |
| Low Liquidity in SLB Market | Medium | India’s SLB market is growing but still less liquid than F&O. Nifty 50 stocks have better matching rates than mid-caps. |
Frequently Asked Questions
Ready to Put Your Idle Shares to Work?
Check if your broker supports SLBM and see current live rates on NSE — it takes under 5 minutes to verify your eligible stocks and potential income.
Disclaimer: This article is for educational purposes only. It is not financial advice. SLBM involves risks including stock price fluctuation during the lending period. Please consult a SEBI-registered financial advisor before making investment decisions. Charges mentioned are based on publicly available information from Zerodha and may change. Always verify current charges from your broker’s official website.
