How to lend shares via SLB on Zerodha

From WebNotes, a public knowledge base. Last updated . Reading time ~10 min. Level: Intermediate.

Securities Lending and Borrowing (SLB) allows long-term equity investors to earn a fee by temporarily transferring shares to borrowers (usually traders who wish to short-sell) while retaining the economic benefit of the position for the lending period. On Zerodha, SLB is accessed through Console and operates on the NSCCL (NSE Clearing Limited) SLB platform. The clearing corporation guarantees both sides of the transaction, so lenders face clearing-corporation counterparty risk rather than individual borrower default risk.

For background on SLB mechanics, eligible securities, and tax treatment, see SLB on Zerodha. For the borrower’s perspective, see How to borrow shares via SLB on Zerodha.

How the NSCCL SLB platform works

SEBI’s SLB framework, revised through Circular SEBI/MRD/SE/Cir-27/2007 and subsequent amendments, operates through a central counterparty model:

  1. Approved list: SEBI and exchanges publish a list of approved securities eligible for SLB. The list is periodically revised.
  2. Series: SLB contracts are monthly series (Series 1 = 1 month, Series 2 = 2 months, up to Series 12 = 12 months). Each series has a standard expiry date aligned to the last Thursday of the month.
  3. Order matching: Lend and borrow orders are placed on the NSCCL SLB platform and matched on price-time priority. The lending fee (also called the SLB rate or lending rate) is the market-clearing rate.
  4. Settlement: On matching, the lender’s shares are transferred to NSCCL’s pool through the depository. The borrower posts collateral (cash or approved securities) with NSCCL. NSCCL acts as the central counterparty, guaranteeing settlement.
  5. Collateral protection: Lenders are protected because NSCCL holds the borrower’s collateral. If the borrower defaults or fails to return shares at expiry, NSCCL buys shares in the market and returns them to the lender. The lender faces NSCCL risk (clearing corporation risk), not individual borrower risk.
  6. Expiry and return: At series expiry, the borrower returns the shares (or NSCCL closes out on default). The shares are returned to the lender’s demat account and the lending fee is credited.

Step-by-step procedure

Log in to Console and navigate to SLB

Log in to console.zerodha.com using your Zerodha client ID and password, and complete TOTP-based authentication. From the main navigation menu, select SLB. The SLB module opens, showing the SLB order book and your current SLB positions.

If the SLB module is not visible in Console, your account may not have the SLB segment activated. Navigate to Account then Segments and check for the SLB activation option, or contact Zerodha support.

Search for the security and select the series

In the SLB module, use the search box to find the security (stock) you wish to lend. Type the stock name or NSE symbol. The platform displays all active series for that stock (Series 1 through Series N, where each series corresponds to a lending period in months).

Select the series that matches your intended lending duration. For example, if you wish to lend for approximately one month, select Series 1 (the nearest monthly expiry). If you wish to earn income over a longer period without recalling early, select a longer series. Longer-series contracts may trade at higher or lower annualised fee rates than shorter series, depending on market demand for borrowing.

Review the existing bid (borrow) and offer (lend) orders in the order book for the selected security and series to gauge the prevailing lending fee rate before placing your order.

Place a lend order

In the order entry panel:

  • Action: Select Lend (as opposed to Borrow).
  • Quantity: Enter the number of shares you wish to lend. The minimum lot size varies by security; check the NSCCL SLB lot size list for the specific stock.
  • Lending fee: Enter the fee rate at which you are willing to lend. This is expressed as an annualised percentage (for example, 8% per annum) or sometimes as a flat fee per share per day depending on the platform’s input format. The lending fee is the income you will receive from the borrower. A higher fee rate reduces the probability of immediate matching (fewer borrowers will accept a high rate), while a lower rate increases matching probability but reduces income.
  • Order type: Typically Limit (matching at your specified fee or better from the borrower’s perspective).

Click Submit to place the lend order on the NSCCL SLB order book.

Monitor matching status

After placing the lend order, it appears in the Open orders section of the SLB module with a status of Pending until matched. If no borrower is willing to borrow at your specified fee, the order remains open for the duration of the session. You can modify the fee downwards to improve matching probability, or cancel the order.

If the order is matched, the status changes to Executed or Traded. Zerodha charges the SLB order fee (Rs 100 per order as of mid-2026) at this point.

Confirm settlement and demat debit

After the trade date, on the settlement date (T+1 or as specified by NSCCL), the shares are debited from your CDSL demat account and transferred to NSCCL’s pool. In Console, the SLB position now appears under Active SLB positions with details including:

  • Security and series.
  • Lent quantity.
  • Lending fee earned (total for the series).
  • Expiry date.
  • Borrower’s collateral held by NSCCL (for reference).

The demat debit appears in your demat transaction statement. The shares are no longer visible in your Kite Holdings (since they are in NSCCL’s pool), but the active SLB position in Console confirms your economic interest.

Receive corporate action benefits

During the lending period, the borrower is legally the holder of the shares (since they are in NSCCL’s pool and then on-lent to the borrower). However, SEBI’s SLB framework requires that any corporate action benefits accruing during the lending period (dividends, rights, bonuses) are passed through to the lender. NSCCL facilitates this pass-through:

  • Dividends: The borrower compensates the lender for dividends paid on the lent shares. This compensation is credited to the lender’s account.
  • Bonus shares: Bonus shares are transferred back to the lender’s account on the ex-date.
  • Rights issues: Rights entitlements are passed through to the lender.

Confirm the specific corporate action pass-through mechanism with Zerodha support for each event, as the timing and mechanics may vary.

Receive shares and lending fee at expiry

At the series expiry date (last Thursday of the expiry month), the borrower returns the equivalent quantity of shares to NSCCL. NSCCL returns the shares to your demat account and credits the lending fee to your trading account. The shares appear again in Kite Holdings as free delivery holdings after the return settlement.

If the borrower fails to return shares, NSCCL buys the shares in the market using the borrower’s collateral and returns them to you, along with any applicable penalty. You do not incur a loss from borrower default under the central counterparty model.

What can go wrong

  • Lend order not matched. Demand for borrowing the specific stock at your fee rate may be insufficient. Lower the fee to improve matching probability, or choose a more in-demand stock. High demand for shorting (around corporate announcements or index events) improves lend order fill rates.
  • Shares needed urgently during lending period. You must initiate an early recall (see How to handle an early SLB recall). The recall takes one to three business days and may not always succeed if the borrower contests the recall.
  • Lending fee lower than expected market rate. The SLB fee is negotiated on the order book and fluctuates with market demand for borrowing. Monitor the prevailing fee rates before placing a lend order rather than accepting the first available rate.
  • Dividend compensation delayed. If a dividend record date falls during the lending period, the compensation credit may arrive later than the ex-date. Contact Zerodha support with the specific dividend event details.
  • Tax treatment of lending fee. The lending fee received is typically treated as other income (not capital gains) for income tax purposes and is taxable in the year of receipt. The corporate action compensation received from the borrower is also taxable. Consult a tax adviser for individual treatment.

References

  1. SEBI Circular SEBI/MRD/SE/Cir-27/2007, Securities Lending and Borrowing Scheme, 22 October 2007, https://www.sebi.gov.in/legal/circulars/oct-2007/securities-lending-and-borrowing-scheme_10782.html.
  2. NSCCL SLB approved securities list and operational circulars, https://www.nseindia.com/products-services/securities-lending-borrowing.
  3. SLB – Securities Lending and Borrowing on Zerodha, Zerodha Support Portal, https://support.zerodha.com/category/trading-and-markets/margins/articles/slb.
  4. SEBI Circular SEBI/HO/MRD/2020 series on SLB framework amendments.
  5. CDSL operational instructions on SLB demat transfers, https://www.cdslindia.com/Publications/operationsinstruction.aspx.

Conflict-of-interest disclosure: WebNotes Editorial Team has no financial relationship with Zerodha or any broker. This guide is produced for informational purposes only and does not constitute investment or financial advice.

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WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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