Securities Lending Scheme of Securities and Exchange Board of India

Securities lending scheme clarifies fungible share lending is not a transfer for capital gains treatment.

The Securities Lending Scheme allows a lender to deposit securities with a registered approved intermediary who may lend them to a borrower; beneficial interest and corporate benefits remain with the lender while title vests with the borrower who must return equivalent securities and corporate benefits. The approved intermediary issues receipts, may act as trustee, must maintain records, take collateral and fees from borrowers, guarantee return of equivalents (or make good losses), liquidate collateral on default and notify authorities. The Board clarified such fungible share lending is not an exchange constituting a 'transfer' for capital gains purposes.