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What is Pledging of Shares Is It Dangerous for Investors

As a thumb rule, pledging of shares above 50% can risky for the promoters. This is because pledging of shares is a sign of poor cash flow, low-creditability high-debt company, and inability to meet the short-term requirements.

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What is Pledging of Shares Is It Dangerous for Investors

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  1. What is Pledging of Shares? Is It Dangerous for Investors? In the burgeoning stock markets, the secret to success lies in the proper understanding of various technical terms that hold the information hidden behind them. This is why it is necessary for traders and investors to gain as much knowledge they can about these terms so as to make the right move towards their investment. One such term is pledging of shares. If you have not heard it before, it’s time to decode it and learn more about it in this post. So, let’s get to know more. What does pledging of shares mean? When it comes to examining a number of stocks for investment, the pledging of shares is one of the many crucial factors to ponder upon, which is often unnoticed by many investors. A high pledging of shares can be a pain point for the shareholders. In simple language, pledging of shares refers to obtaining loans against the shares that one possesses. Shares are largely referred as assets. Pledging of shares is an option for the promoters of a company to seek loans to fulfill their business or personal requirements by putting their shares as collateral to lenders. What is the reason behind pledging of shares? According to the top 10 stock brokers in India, pledging of shares emerges as the last resort for the promoters to get money. It is moderately safer for the promoters to advance funds through equity funding or by obtaining debts. However, if the promoters are planning to pledge their shares. then it refers that all the other choices of raising funds have been

  2. exhausted. You can consult the best stock broker in India to gain more insights about the pledging of shares in Indian stock markets.

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