The software was released on Saturday. The Securities and Exchange Board of India-registered intermediaries can avail of the module from Monday onwards.

The implementation of the module is critical as almost the entire stock-lending is going to be undertaken through the depository and its participants, with most intermediaries only willing to undertake activity in demat shares. In fact, most of the intermediaries are themselves depository participants with NSDL. These are the National Securities Clearing Corporation, Stock Holding Corporation of India and Deutsche Bank.

"An intermediary would be required to keep the accounts of the lenders and borrowers. We have tried to incorporate as many features to ensure that this is done easily and effectively," said NSDL managing director CB Bhave.

The National Stock Exchange has outlined a detailed business plan for the commencement of stock-lending from October-end and installation of the module has come at the right time. The depository's role has been enlisted in the procedures specified in the business plan. In the case of lending, the procedure would be as follows. The lender shall instruct its depository participant to enter a transaction for earmarking a security and quantity available in its beneficiary account in favour of the approved intermediary.

The instruction will specify the date for execution and the date at which the return is expected. The participant shall key this instruction into the depository's securities-lending module. The depository on receipt of such information will forward the same to the participant of the approved intermediary. Simultaneously, the lender shall send a request to the intermediary for depositing the securities. The intermediary might accept the full or part of the quantity offered for lending.

The borrowing procedure will be thus. The borrower will instruct its depository participant to enter into a transaction for borrowing any particular security and specific securities. On successful entry into the depository module, this transaction will be forwarded to the depository. On receipt of this information, the depository will forward the same to the participant of the intermediary.