Fun-ancial ज्ञान: What is pledge in stock market | Jagran Business Exclusive | Mutual Fund

In simple terms, pledging shares implies taking out a loan against the stocks you already possess. It is a common means of obtaining funds for people and businesses to meet their needs for operating capital, pay off existing debt, etc. Pledged shares are those that have been borrowed against. Companies, promoters, and individuals do keep ownership of the shares after pledging.

When you pledge something, you're retaining it as collateral.Investors can trade in large numbers because to pledging since they have access to more capital. In the stock market, pledge refers to keeping shares as security. In order to secure funding from banks or other financial institutions to cover their trading margins, individual investors can also pledge their shares.

Investors can use the shares they have pledged as collateral to help them pay their financial obligations. Investors who have shares with a high value frequently pledge their shares. As a result of ongoing market volatility, both the share value and the collateral value are always changing.