{"id":3938,"date":"2023-03-09T06:23:12","date_gmt":"2023-03-09T00:53:12","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=3938"},"modified":"2025-03-26T20:38:22","modified_gmt":"2025-03-26T15:08:22","slug":"what-is-securities-based-lending","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-securities-based-lending\/","title":{"rendered":"What is Securities-Based Lending?"},"content":{"rendered":"<h2><strong>About Securities-Based Lending:<\/strong><\/h2>\n<ul>\n<li>It is the practice of <strong>raising a loan by offering your existing investments<\/strong> in stocks\/mutual funds\/ Exchange-traded funds (ETFs) <strong>as collaterals.<\/strong><\/li>\n<li>These kinds of loans are <strong>generally offered to high-net-worth individuals<\/strong> <strong>by large financial institutions<\/strong> and private banks.<\/li>\n<li>The loan <strong>amount depends<\/strong> <strong>on<\/strong> the <strong>security the borrower is offering.<\/strong><\/li>\n<li>The loan can then be used for making purchases like real estate or personal items.<\/li>\n<li>This loan <strong>cannot be used for making further security purchases<\/strong>.<\/li>\n<li><strong>Due to the<\/strong> <strong>inherent volatility<\/strong> in the nature of stocks\/mutual funds, <strong>the risk of forced liquidation tends to be very high for these loans.\u00a0<\/strong><\/li>\n<li><strong>Borrowers benefit<\/strong> from <strong>easy access to capital<\/strong>, <strong>lower interest rates<\/strong>, and <strong>greater repayment flexibility<\/strong> and <strong>also avoid having to sell their securities<\/strong>.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h2><strong>Q1)\u00a0What is equity security?<\/strong><\/h2>\n<p>An equity security is a financial instrument that represents an ownership share in a corporation. The instrument also gives its holder the right to a proportion of the earnings of the issuing organization. The typical equity security is common stock, which also gives its owner the right to a share of the residual value of the issuing entity, in the event of a liquidation.<\/p>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/economictimes.indiatimes.com\/markets\/stocks\/news\/adani-group-pre-pays-over-900-million-worth-share-backed-financing\/articleshow\/98471382.cms\" target=\"_blank\" rel=\"nofollow noopener\"><u>Adani Group prepays $902 million share-backed loans<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Securities-Based Lending is the practice of raising a loan by offering securities as collaterals.<\/p>\n","protected":false},"author":5,"featured_media":3939,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-3938","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3938","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=3938"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3938\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/3939"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=3938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=3938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=3938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}