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Tuesday, October 10, 2017

Mention the Precautions while taking stocks and shares as security

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Banker must take the following precautions while advancing against stocks and shares:
(i) In the case of partly paid shares (a) the banker should never register them in his name.
(b)  He must ensure that pending calls are paid.
(c) Sufficient margin should be taken to avoid any future loss or change in the value of the security.
(d)  The banker should verify share certificate and ensure that the calls, are paid properly and entered in the space provided for the same.
Other precautions
(i)  Update the list of shares which the particular bank is willing to lend against on a regular basis.
(ii) Updating the amount that can be lent against a particular share which is called the card limit at regular intervals
(iii)                Yearly review of the portfolio or more frequent review depending upon the volatility in the capital market.
1 comments for "Mention the Precautions while taking stocks and shares as security"

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Diploma in Accountancy