The Securities Lending and Borrowing Mechanism allow short sellers to borrow securities for making delivery. Short Selling means selling of a stock that the seller does not own at the time of trade. Short selling can be done by retail as well as institutional investor, by borrowing the stock through Clearing House of a stock exchange which is registered as Approved Intermediaries (AIs).
Under the scheme, the lenders give their idle shares to short sellers for a period ranging from one month to a year, for a fee, which is determined by demand and supply. This gives long-term investors an opportunity to earn additional income.
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