Meaning of pledged holdings.

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In simple terms pledging of shares means borrowing funds against the shares which one holds. Pledging is usually done by promoters but it can be done by investors as well.In Indian share market promoters are those who monitor day to day affairs of a company. Promoters do so to meet different financial needs of a company like expansion or carry out operational activities. Banks consider shares as a form of security and raise loans against it. Promoters finds pledging an efficient and convenient way to borrow funds. And it is not always a bad idea. Traders should check if in a company pledged shares are some where between 2-8% then it can be ignored. But it should not be more then it. Traders should study companies fundamentals and learn whether they are able to meet their financial obligations in future or not and accordingly decide whether they should trade in its stocks or not.