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WHAT IS VYAJ BADLA? As you are aware, with the introduction of New Carry Forward system in the modified form, the volumes on the Stock Exchange have considerably increased. Those buyers who Purchases 'A' Group scrip in One Settlement but do not Square-Up in the same settlement, the purchase position is Carried Forward to next settlement. However, this purchase position needs to be financed through Stock Exchange. Here comes the VYAJ BADLA in to play. As mentioned above, a Carried Forward transaction in 'A' group shares can be kept open up to 90 days. After the end of every settlement, a Badla Session is kept on each Saturday between 10 AM TO 12.30 PM to enable the Financier to Finance for the open Purchase position. The Buyers & sellers position along with Badla rates are reflected on the Bolt Screen as per normal trade practice. In addition the screen also shows the yearly yield on the badla finance which continuously goes on changing depending upon the requirement of the fund on the one side and availability of fund on the other side. At present there are 150 scrips in 'A' group you can do Vyaj Badla in any scrip which gives highest return of your choice. You can also shift from one scrip to another scrip in different badla sessions. Badla rate is nothing but the rate of interest at which the Financier want to finance. There is total transperency since all deals are executed through Bolt via Stock Exchange Clearing House. WHO CAN DO VYAJ BADLA ? Any Individual, Company, Firm or an HUF having surplus fund can invest and do the Vyaj Badla. There is absolutely no restriction. WHAT AMOUNT ONE CAN INVEST IN VYAJ BADLA? Earlier there was a limit of Rs.10 crores per settlement for Vyaj Badla transactions. However in the New modified system, there is no such limit. The shares to be received by Vyaj badla financiers will be deposited with the clearing house. The Exchange has arranged insurance cover for such shares lying in the clearing house and the same will be further increased as the volume of business goes up. Further the system is flexible. You can withdraw from badla finance from any settlement. You get your money back in next pay-out. HOW MUCH SECURED IS THIS LENDING ? As aforesaid, the shares against which the badla finance is made are directly received by the clearing house and deposited in the vyaj badla account of the concern member broker. Thus, ALL financing in badla is now risk free as the exchange has a Trade Guarantee Fund that protects the badla financier from defaults by the buyers. It was not so earlier. In the absence of a Trade Guarantee Fund. The financier from was exposed to the risk of defaults. But not so now when the Exchange keeps the delivery of shares and also underwriters the risk of bad-deliveries. Further, a badla transaction is a repurchase transaction between the buyer and the financier and the later carries no risk of appreciation or fall in the scrip's price. Therefore although the funds are deployed in the stock market, the business is purely of financing against assets. WHAT CAN BE THE RATE OF RETURN ? As aforesaid, the volume at the bourses has gone up considerably due to New Carry Forward System. It is well known that because of economic slow down there has been a crippling shortage of funds with corporate. Hence if one enters at this juncture for badla financing there is ample scope for handsome return. BADLA FINANCING is an excellent opportunity for deploying funds for very short period like one week. The earning varies depending upon the supply and demand of funds and condition prevalent at the stock exchange. The stock markets are expected bullish and if the bullish trend continues, there is going to be heavy demand of funds in the times to come. For last few settlements, vyaj badla financing has given handsome returns of average20% to 26% per annum. Is it not worth earning this kind of RISKFREE return? BADLA FINANCE - SEQUENCE OF EVENTS
If one wishes to withdraw from badla at any point of time one need not do badla on forthcoming Saturday and fund will be realeased in next pay-out. To Sum up : {a} Vyaj Badla financing presently offers extremely attractive returns compared to alternative investment opportunities available in the market viz. Govt. Securities, PSU Bonds, ICD'S etc. {b} It is fully secured, since the shares in which the vyaj badla financing is done become the property of the investor and the same is evidenced by the Contract Note of the BSE Broker . {c} It is perfectly legal investment, since the Carry forward system designed and implemented by BSE is duly approved by SEBI, the regulatory authority. {d} It is risk -free investment, since The Bombay Stock Exchange has the trade guarantee system which guarantees the due performance of the trades. CAUTION This document has been prepared and complied from reliable source. While utmost care has been taken to ensure that the facts stated are accurate and opinions given are fair and reasonable, neither Prarup Shares & Stock Brokers Pvt. Ltd., nor any of its Directors, Officer or employees shall be responsible in anyway for the contents. For further details/clarification/information please contact Challenge Consultancy Services Pvt. Ltd. 2, Tardeo Airconditioned Market, 4th Floor, Tardeo Road, Mumbai - 400 034 Tel. - 496 3811-12-13-14-15, 493 7525, 494 88 58 E-mail - |
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