Prudential Regulations for Banks

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REGULATION-VI
FINANCE FACILITIES AGAINST SHARES
^{No bank shall provide unsecured
credit to finance subscription towards floatation of share capital of public limited
companies.

2. No bank shall allow financing facilities whether fund based or non-fund based against
the shares of companies not listed on the Stock Exchange.

3. Facilities against the shares of listed companies shall be subject to the following
minimum margins:-

(a) Where the market value does not
exceed the preceding 12 months average market value
20%

(b) Where market value exceeds the
preceding 12 months average market value but does not exceed twice the preceding 12 months
average market value.
40%

(c) Where the market value exceeds
twice the preceding 12 months average market value.
50%

4. The banks are free to set higher margin requirements keeping
in view other factors.

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(a) Where the market value does not exceed the preceding 12 months average market value	20%
(b) Where market value exceeds the preceding 12 months average market value but does not exceed twice the preceding 12 months average market value.	40%
(c) Where the market value exceeds twice the preceding 12 months average market value.	50%