Rent Out Stocks via SLBM on Dhan
Most long-term investors in India hold quality stocks in their demat accounts for months or years, waiting for price appreciation and the occasional dividend. Beyond that, those holdings sit idle in their demat account as they are not traded or used. What if those idle stock holdings sitting in your demat account could earn you an additional rental income, without you selling them or giving up your long-term position?
At Dhan, we have built SLBM to address this challenge and enable you to earn rental income on your investment by lending those shares to borrowers without losing the long-term position.
Key takeaways:
- SLBM allows you to receive rental income on idle stocks without selling them.
- SLBM incurs a rental brokerage of 4.99% with 18% GST on the brokerage amount.
- You stay in control at all times as you choose which stocks to lend, how many, and for what duration.
What is Rent Out Stocks via SLBM?
SLBM stands for Stock Lending and Borrowing Mechanism. It allows you to lend your idle stock holdings to traders and receive a rental fee in return. The shares are not sold, and your ownership remains intact. The lending occurs through an exchange‑backed SLBM mechanism with a fixed tenure and clear settlement rules.
We have built the Rent Stocks via SLBM to let you easily see the live demand of eligible stocks, create your own offer, set the quantity and duration, and confirm the rental order on the same interface.
However, SLBM is not free; it carries a fee structure. For activation of Rental Stocks via SLBM, we require you to activate SLBM and DDPI. In this process, we charge you a nominal fee of Rs 199 to activate SLBM and Rs 100 to activate DDPI. Additionally, we charge 4.99% as a rental brokerage, and 18% GST is charged on the amount of the brokerage.
On the Dhan platform, these fees are only for one side of the leg, which means when the stocks return to your portfolio after the rental period has ended, there will be no additional charges.
Why does it matter?
The common pain point among most long-term investors is that although they hold quality stocks for years, beyond the price appreciation and periodic dividend, there are no active earnings generated from these stocks, and the portfolio looks productive on paper but is largely idle in practice. SLBM solves the productivity gap in your portfolio.
Makes idle holdings productive
Instead of only waiting for price appreciation for returns, SLBM allows you to potentially earn rental yield on the same stock during your holding period. So, you get an additional income from a stock that you already intended to hold for the long term.
For example, if you own 100 shares of value worth ₹20,000 and rent them for 25 days at ₹20 per share, you earn ₹2,000 as rental income, which, even after deducting a small rental brokerage, provides you a steady additional income from your idle holdings.
Backed by the exchange
The cycle of lending shares, the expiry, and recall of shares is all handled through a defined market structure. NSE Clearing Limited (NCL) acts as the clearing counterparty and settlement guarantor for all SLBM transactions, thereby mitigating any counterparty risk for your rented stocks.
Keeps you in control
You decide which stocks to lend and for how long, and if you need the shares before the contract expires, you can initiate an early recall for the eligible contracts.
How does it work?
Setting up SLBM on Dhan takes just a few steps:
Step 1: Go to the Rent Stocks section in the Dhan app or web platform.
Dhan App:
Dhan Web:
Step 2: Authorise lending by activating SLBM and DDPI (a one-time nominal set-up fee).
Step 3: See the live demand for your stocks or create your own rental offer.
Step 4: Select the amount and time you want, and place the order.
Step 5: Monitor all rented positions, returns, and net income directly in our Rental Portfolio interface.
Key benefits of SLBM
SLBM offers you several benefits. Some of those are:
- Dual income: You can get both stock appreciation and rental income from the same holding.
- Flexibility: You can rent only the stocks you want, and you can recall them before the expiry of the contract.
- Transparent structure: The SLBM process on our platform is executed through an exchange-backed mechanism with specified settlement rules.
- Simple tracking: Our rental portfolio allows you to view rented and borrowed positions all in one place.
Use cases
Some practical use cases of the SLBM are:
The long-term holder
SLBM can be used by long-term investors to earn additional income on their idle holdings without even selling them.
Offsetting market volatility
The rental income from SLBM can serve as a buffer to your portfolio in a month where the market is moving sideways or slightly down, and ensure that your portfolio remains productive even when prices are stagnant.
Conclusion
SLBM feature allow a secure, exchange-regulated means of generating additional income on your existing stock holdings. By bridging the gap between idle assets and market demand, it provides you with a powerful tool to maximise the productivity of your portfolio. Ultimately, it eliminates the frustration of idle holdings and ensures that every share you own is working for you.
