Promoter Borrowing Against Shares Hits ₹7 Trillion
By Business Desk
Promoters of NSE-listed companies have borrowed over ₹7 trillion against their shares by June 2026, a threefold surge since 2019, fueling expansion and new ventures.
Promoters of companies listed on the National Stock Exchange (NSE) have significantly escalated their borrowing against shareholdings, with the total crossing ₹7 trillion by the June 2026 quarter.
This substantial figure represents more than a threefold increase from the ₹2 trillion recorded in June 2019, prior to the pandemic. The proportion of total promoter stake involved in these borrowings also saw an uptick.
Key Borrowing Metrics
- Total borrowing against shares (June 2026): ₹7 trillion
- Total borrowing against shares (June 2019): ₹2 trillion
- Promoter stake involved (June 2026): 3.17%
- Promoter stake involved (June 2019): 2.52%
These funds primarily facilitate business expansion, acquisitions, and the launch of new ventures. Some borrowing also addresses personal funding requirements or aims to increase promoters’ stakes within their own companies.
Sectoral Growth and Borrowing Methods
The surge in borrowing is particularly evident in sectors such as metals and commodities, which are currently undergoing extensive capacity expansion. Promoters employ methods including directly pledged shares and shares under non-disposal undertakings (NDU).
- Companies engaging in promoter borrowing (June 2026): 491
- Companies engaging in promoter borrowing (June 2019): 481
NDUs involve promoters committing not to sell or transfer the shares used as collateral, providing a structured approach to leveraging existing equity for growth without ownership dilution.
Heightened Scrutiny and Market Risks
While using shares as collateral allows for growth financing, it introduces inherent risks, notably margin calls during market downturns. Such calls could compel promoters to pledge additional shares or lead to lenders selling their holdings, impacting market stability.
In response to recent court judgments, lenders have adopted more stringent practices, frequently demanding collateral beyond just shares. These rulings clarify that lenders against pledged shares are secured creditors only up to the value of the pledged assets, not financial creditors of the borrower, altering the priority in liquidation scenarios.