Can you really ‘rent out’ your stocks not home for regular monthly income? Expert breaks it down
The Stock Lending and Borrowing (SLB) mechanism lets investors lend idle shares for a fee, while borrowers use them for short selling, arbitrage, or delivery needs. The process boosts market liquidity and is fully regulated. Transactions are facilitated through approved brokers and clearing corporations like NCL and ICCL, ensuring safety and zero counterparty risk.
- Nov 5, 2025,
- Updated Nov 5, 2025 2:28 PM IST
For generations, earning passive income meant one thing — collecting rent from property. But what if you could “rent out” your stocks instead of your house and still earn a fixed income every month? According to personal finance coach and consultant Sahil Bhadviya, that’s exactly what India’s Stock Lending and Borrowing Mechanism (SLBM) allows investors to do.
The stock lending and borrowing (SLB) mechanism allows investors to temporarily lend their idle shares to other market participants in exchange for a fee. Borrowers use these shares primarily for short selling, arbitrage opportunities, or to meet delivery obligations. This exchange-regulated process enhances market liquidity and stability. The SLB process is facilitated through approved intermediaries (like brokerage firms) and clearing corporations such as NSE Clearing Ltd (NCL) and Indian Clearing Corporation Ltd (ICCL), which act as a central counterparty to guarantee the transactions and eliminate counterparty risk.
Bhadviya explains that SLBM lets investors lend their shares to traders for a defined period in exchange for a rental fee — similar to earning rent on real estate. “Most people have stocks that just sit idle in their demat accounts. Through SLBM, you can make those holdings work for you and earn passive income without selling them,” he says.
Here’s how it works. Suppose you own 1,000 shares of Company XYZ priced at Rs 500 each. If you don’t plan to sell them soon, you can lend them through SLBM. Meanwhile, a trader expecting a short-term fall in XYZ’s price borrows your shares by paying a fee, sells them at ₹500, and aims to buy them back cheaper — say at ₹450 — later. The trader profits Rs 50 per share (minus the borrowing cost), while you, the lender, earn a lending fee and get your 1,000 shares back.
If the stock price rises instead, the trader bears the loss — but your shares remain safe. That’s because every SLBM transaction is secured by collateral. In India, borrowers must deposit 125% of the stock’s value as collateral with the exchange’s clearing corporation. This ensures that even if a borrower defaults, the clearing body can liquidate the collateral and return the shares to the lender. “The lender takes zero price risk — all risk lies with the borrower,” Bhadviya clarifies.
Rental contracts are time-bound, typically ranging from a few days to a few months. When the contract expires, the shares automatically move back from the borrower’s demat account to the lender’s via the clearing corporation, usually within 24–48 hours.
For investors keen to try SLBM, several brokerage platforms now make it easy. Bhadviya highlights the Dun platform as one of the first to digitize the stock renting process. It displays which stocks are currently in demand for borrowing, their rental yield, and potential earnings. For example, stocks like RVNL or Voltas may offer rental returns of around ₹5–₹6 per share, translating into an annualized yield visible on the platform.
Investors can also create their own lending offers or check the “rental portfolio” section to track ongoing contracts and income earned. Dun charges a brokerage fee of 4.99% on the rental income, plus applicable GST and exchange charges.
However, Bhadviya advises caution. “While SLBM is a great way to generate additional income from idle stocks, it’s important to use trusted, SEBI-regulated platforms and understand the contractual timelines,” he notes.
In short, SLBM offers a modern twist to the age-old concept of rent — enabling investors to earn a steady, low-risk income from their stock holdings while retaining ownership and potential for long-term capital gains.
Disclaimer: Business Today provides market, bullion, crypto and personal news for informational purposes only and should not be construed as investment advice. All investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
For generations, earning passive income meant one thing — collecting rent from property. But what if you could “rent out” your stocks instead of your house and still earn a fixed income every month? According to personal finance coach and consultant Sahil Bhadviya, that’s exactly what India’s Stock Lending and Borrowing Mechanism (SLBM) allows investors to do.
The stock lending and borrowing (SLB) mechanism allows investors to temporarily lend their idle shares to other market participants in exchange for a fee. Borrowers use these shares primarily for short selling, arbitrage opportunities, or to meet delivery obligations. This exchange-regulated process enhances market liquidity and stability. The SLB process is facilitated through approved intermediaries (like brokerage firms) and clearing corporations such as NSE Clearing Ltd (NCL) and Indian Clearing Corporation Ltd (ICCL), which act as a central counterparty to guarantee the transactions and eliminate counterparty risk.
Bhadviya explains that SLBM lets investors lend their shares to traders for a defined period in exchange for a rental fee — similar to earning rent on real estate. “Most people have stocks that just sit idle in their demat accounts. Through SLBM, you can make those holdings work for you and earn passive income without selling them,” he says.
Here’s how it works. Suppose you own 1,000 shares of Company XYZ priced at Rs 500 each. If you don’t plan to sell them soon, you can lend them through SLBM. Meanwhile, a trader expecting a short-term fall in XYZ’s price borrows your shares by paying a fee, sells them at ₹500, and aims to buy them back cheaper — say at ₹450 — later. The trader profits Rs 50 per share (minus the borrowing cost), while you, the lender, earn a lending fee and get your 1,000 shares back.
If the stock price rises instead, the trader bears the loss — but your shares remain safe. That’s because every SLBM transaction is secured by collateral. In India, borrowers must deposit 125% of the stock’s value as collateral with the exchange’s clearing corporation. This ensures that even if a borrower defaults, the clearing body can liquidate the collateral and return the shares to the lender. “The lender takes zero price risk — all risk lies with the borrower,” Bhadviya clarifies.
Rental contracts are time-bound, typically ranging from a few days to a few months. When the contract expires, the shares automatically move back from the borrower’s demat account to the lender’s via the clearing corporation, usually within 24–48 hours.
For investors keen to try SLBM, several brokerage platforms now make it easy. Bhadviya highlights the Dun platform as one of the first to digitize the stock renting process. It displays which stocks are currently in demand for borrowing, their rental yield, and potential earnings. For example, stocks like RVNL or Voltas may offer rental returns of around ₹5–₹6 per share, translating into an annualized yield visible on the platform.
Investors can also create their own lending offers or check the “rental portfolio” section to track ongoing contracts and income earned. Dun charges a brokerage fee of 4.99% on the rental income, plus applicable GST and exchange charges.
However, Bhadviya advises caution. “While SLBM is a great way to generate additional income from idle stocks, it’s important to use trusted, SEBI-regulated platforms and understand the contractual timelines,” he notes.
In short, SLBM offers a modern twist to the age-old concept of rent — enabling investors to earn a steady, low-risk income from their stock holdings while retaining ownership and potential for long-term capital gains.
Disclaimer: Business Today provides market, bullion, crypto and personal news for informational purposes only and should not be construed as investment advice. All investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.