I am impressed by the measures announced by the government in various fields.However, I do have a problem with the new stock lending scheme. According to this, lending of shares will be allowed by certain registered intermediaries. It says that the borrower will not be obliged to return the shares and would be allowed to return them with the same value.
I have my doubts about the second clause. Allowing the return of similar shares can lead to a lot of illegitimate practices.
It is possible that after borrowing a share that has a potential for a bull run, the borrower returns another share of the same value (value at the time of borrowing) but with a potential to depreciate. Of course, the lender will be careful in its contract with the borrower, but if it is legal to return similar shares, the latter has legal immunity. When Reliance returned similar shares, it was branded illegal and unfair. Today, the same act will be termed legitimate.
Moreover, there is ambiguity as far as the term value is concerned. Is it the value of the share at the time of contract? For dividends, does it depend upon the percentage received by the holder? Or, is it the price of the share, after taking into account an expected appreciation or depreciation, as the case may be?
I hope doubts such as these are cleared fast.
