How profitable and possible is SLB? (Share lending and borrowing)

After digging for some information I have come to the opinion that lending shares requires too much capital - min amount that can be lent is 50 lakh.

I did not ask what the yields tend to be, mostly because I do not have 50 lakh worth of shares to lend! Anyone with any ideas do let us all know.


based on the shares I have seen, eg: BHEL right now is trading at 228 with 2 month future price of 225.5. Basically the future price is at a 1-2% discount. Now after any overheads and after paying our lender lets call it a 1.5% return in 2 months.

This seems quite low, because not every 2 months will we get the opportunity for reverse arbitrage. Also we would need to have a 125% balance idling in our accts in order to borrow these shares. So this finally would translate into a 10-12% return, somewhat better than an FD ... For all this trouble I wonder if it is worth it.

I understand it might be better to find other scrips which have better opportunities, but there did not seem very many. If I have gotten any numbers wrong on the borrowers side please correct me!



Your analysis looks right, look at SLB more as a tool wherein you don’t bring in money and buy stocks just for the purpose of lending, but as a hedge against stock price falling if u have been holding onto a stock for a long while and are circumspect about short term behavior…

In case of borrowing remember to factor in the impact while rolling over your hedge from one month to another, the impact can be considerable…

1 Like