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!