Story of How I lost INR 40,000 by participating in Stock Lending and Borrowing Scheme (SLBM)

Background

I came to know about it a bit earlier and there was a lot of paper work that had to be signed. I initially attempted to complete the process by sending it online after filling the forms and scanning them and sending them to IDBI capital official email ids. This was during the height of covid 19, so travel was still limited and work from home was going on. However, it failed as they required office visit in-person for form submission and verification.

So, I waited another 1 year. I also came to learn that the scheme is still not popular and I am possibly the first one to apply for this scheme in the entire eastern India region of IDBI capital. I filled the form and resubmited physically.

Procedure

I needed to go to a specific SLBM page of NSE everyday and export the file in CSV format - https://www.nseindia.com/market-data/securities-lending-and-borrowing

Then I needed to filter the spread with a value (not the blank ones) under series -B. SLB is generallay done on the stocks of the next month as these stocks are used for future and options.

Once, I have the list of SLBM stocks for that time of the day declared by NSE. I will open my own demat a/c and tally if those stocks are there with me an in what quantity?

Then I would place an email with the name of the stock and quantity that I wanted to pledge to the local IDBI capital office designated emails. By the end of the day if the requirement of my stocks is there they will pledge them a statement will be sent to me and the rent will be transfered to my a/c like dividend is distributed.

Now for the next month IDBI capital will manage the stock and return them to my demat a/c.

The Mistake

One fine day I pledges TVS motors and the amount I pledged is not the amount I actually owned, it happened because of not physically cross checking. However, as a protective mechanism I always asked the IDBI capital authorities to cross check my quanity in my demat A/c with the pledged amount of stocks and THEY DIDNT.

THEY SIMPLY PLEADGED MY STOCKS IN OPEN MARKET.

Result, all my TVS motors stocks were auctioned + 14000 INR additional fine which was reflected as a negative balance in my demat a/c untill I paid back.

Now, I am not pledging my stocks for SLBM and I have told IDBI Capital that untill the automate and computerize these cross checking mechanism. People are going to make mistakes and loose money for no reason at all.