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.
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Diploma in Accountancy