The National Securities Clearing Corporation Ltd (NSCCL), a wholly owned subsidiary of NSE, had decided to get into the stock-lending business following a delay on the part of the Stock Holding Corporation of India (SHCIL) and UTI to start operations. SHCIL has already received SEBI's nod for commencing operations. However, there has been a delay on the part of the custodian to kick-off stock-lending.

In a statement issued on Tuesday, SEBI has said that the stock lending scheme, which had come into force on February 6, 1997, is one where the temporary needs of the borrower, like a broker, are met from the lenders' portfolio to support the trading activity or to meet the deliveryobligation.

The lender loans the securities to the borrower through an approved intermediary under an agreement which is for a specified period with the condition that the borrower shall return equivalent securities of the same type and class at the end of the specified period along with the corporate benefits accruing on the securities borrowed.

So far, licences for approved intermediaries have been granted to SHCIL, Reliance Capital and Deutsche Bank. The exchange, which has been keen to introduce stock lending as it feels this will help it rival BSE's badla, has been miffed at delays in introducing the instrument.

The National Securities Depository is also putting in place a composite stock lending module to facilitate lending of shares in the demat form. Most intermediaries have already made it clear that the activity would pick up only in the demat form, as doing so in a paper-based system is risky.