Value of shares pledged by promoters decline by 16 pc in September

The value of shares pledged by promoters of BSE-listed companies declined 16 per cent to Rs 2.10 lakh crore at the end of September, according to exchange data. The value of promoter’s pledged shares stood at Rs 2.5 lakh crore as on August 30 this year. Promoters usually raise funds against the shares pledged for the same company or to finance other projects. It means that these shares are offered as collateral to financial institutions in exchange for loans. Till September this year, pledging of shares was seen in as many as 2,919 firms out of 4,643 BSE-listed companies. High pledging levels are typically not considered as a good sign by investors as a downturn in the market price can lead to invocation and change in management. Further, decline in the level of share pledging may indicate scaling down in stress. According to BSE data, promoters of as many as 401 companies pledged up to 30 per cent of their respective holdings, while 131 firms saw in the range of 30-50 per cent of the promoter’s holding being pledged in the month of September. Further, there were 77 companies in which 50-75 per cent of the promoter’s holding was pledged.
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