Earn Monthly Income by Renting Your Stocks via SLBM
Do you have any stocks sitting idle in your Demat account? What if you could put them to work and create a passive income stream that could earn you up to 35% per year in addition to the returns on your portfolio?
This is not a fantasy; it is a powerful feature known as Securities Lending and Borrowing (SLB), and the Dhan platform makes it extremely simple to get started. Consider "renting out" your stocks to generate a steady rental income.
Let's look at how you can turn dormant holdings into earning assets.
What is Security Lending and Borrowing (SLB)?
Simply put, SLB is a marketplace facilitated by the stock exchange. It enables you (the lender) to lend your securities to borrowers at a set price and timeframe. You can specify your own lending fees and quantities, and your orders will execute automatically if they match a borrower's quote on the exchange.
On Dhan, this feature is referred to as "Rent Stocks with SLBM" (Stock Lending and Borrowing Mechanism).
Why Rent Your Stocks?
Dhan has built a seamless and risk-averse system for lenders. Here’s what you get:
- Earn Extra Income: Generate passive returns from your existing stock holdings by lending them to institutional borrowers.
- Risk-Free Renting: Complete safety is assured. All lending transactions are backed by exchange guarantees, ensuring 100% protection for your holdings.
- Retain Ownership: You continue to be the owner of your shares. This means you still benefit from any price appreciation and receive dividends, even while they are rented out.
- Instant Activation & Settlement: Get started quickly and get your stocks back promptly after the contract ends.
- Rent All Stocks in One-go: A dedicated dashboard allows you to manage and lend your entire portfolio efficiently.
- Lowest Brokerage: Enjoy Dhan’s competitive brokerage of just 4.99% on the rental income you earn.
Your Step-by-Step Guide to Renting Stocks on Dhan
Getting started is straightforward. Here’s a simplified process:
- Access the SLBM Feature: Log in to your Dhan trading platform and navigate to the "Rent Stocks with SLBM" section.
- Check the SLBM Screener: Use the Rental Insight SLBM Screener to see which stocks are in demand and what lending rates they are fetching.
- Place Your Lending Quote: Decide the stocks you want to lend, the quantity, and the lending fee you desire.
- Order Execution: Once your quote matches with a borrower's order on the exchange, your lending contract is active.
- Track in Your Dashboard: Monitor all your active and past lending contracts in the dedicated Renting Dashboard with real-time alerts.
- Stocks Return Safely: On the contract's expiry date, the exchange ensures the stocks are returned to your Demat account, typically within 24-48 hours.
What happens to your rented stock?
This is a common and important question.
- During the Loan: Once your order is successful, the stocks are transferred from your Demat account to the borrower's Demat account via the exchange.
- At Expiry: Each rental contract has a set end date. On this date, the exchange's clearing corporation automatically debits the borrower's stocks and credits your Demat account.
Dhan's Rental Portfolio allows you to easily track the status of all of your lent-out securities.
What happens if the borrower defaults?
The system is designed to fully protect the lender. If a borrower fails to return the stocks, the margin they set aside for the transaction is deducted. As a lender, you will be fully compensated - either through an auction for equivalent stocks or by having the equivalent cash value credited directly to your Demat account.
Understanding the Charges
Transparency is key. When you earn rental income through Dhan, here are the charges:
- Brokerage: 4.99% on the rental fee you earn.
- GST: 18% GST is applied on the brokerage amount.
- DP Charges: Applicable for moving shares from your Demat account.
A Quick Example:
Suppose you earn ₹1,000 as rental income by lending your stocks.
- Brokerage: ₹1,000 × 4.99% = ₹49.90
- GST on Brokerage: ₹49.90 × 18% = ₹8.98
- Total Cost: ₹49.90 + ₹8.98 = ₹58.88
(Plus nominal exchange and DP charges)
Your net earning would be ₹1,000 - ₹58.88 = ₹941.12.
Who is borrowing these stocks, anyway?
You may wonder who is on the other end of this transaction. Borrowers are often
- Short-Sellers: Traders who expect a stock's price to fall and borrow shares to sell, intending to repurchase at a lower price later.
- Arbitrageurs: those who seek to profit from price differences between the cash and futures markets.
- Investors Meeting Obligations: Those who must complete a delivery obligation to avoid penalties.
Start Earning Today!
Your investment portfolio is more than a collection of assets; it has the potential to generate recurring income. Dhan's SLB feature allows you to put your idle stocks to work, earning attractive, risk-free returns while maintaining ownership and long-term growth potential.
Are you ready to become a landlord for your stocks? Log in to your Dhan account or Create one and check out the "Rent Stocks" feature today!
