Thread by @FinMedium

What if we told you that you can become a moneylender of stocks?

If you had IRCTC shares you can lend them out and earn a hard cash interest of 10.25% annualized
+unlimited upside
+any dividends!

Read below! 🧵

Please RT and share with others.

Securities lending and borrowing mechanism is a facility open to all investors by the stock exchanges. If you have shares in your demat account you can lend them to someone through the exchange for an interest rate. Just like buying or selling a share.

Why would anyone borrow shares from your? Well arbitrageurs do this all the time.

Whenever spot price is cheaper than the future, they borrow shares and short sell them at the same time buying the future contract.

Pocketing the risk free dividends.

Ofcourse this needs complex systems and infrastructure, so lets just stick with earning cold hard cash from them.

If you lend shares, you enjoy unlimited upside. If you share gives a dividend it will be forwarded to you. It is backed by the exchange and a 100% safe.

For a small long term investor like me this is an extremely safe way to earn extra money on my holdings. But SLB is only limited to FnO stocks!

Interest rates for large caps is small but for midcaps there is very very good earning!

Interest rates are also attractive, for large caps such as HDFC Bank I can get ₹0.5 per share per month or if I had Minda I could get ₹5! That's fantastic.

Also these rates are higher as market volatility also gets higher.

Not many people know about this. As a long-term investor although I get lower rates than selling call options, this is better since there is unlimited upside and I dont have to sell my shares for delivery! It's literally free money! Free lunch!

SLB is not FnO, it's not even related. It's like a bank gives a loan, you will loan out your shares. How can you do this? Every broker provides this facility. Even zerodha.

Not many people do this or know how to do this. I hope this helped. ❤️