When promoters offer their shares as security for loans (Promoter Pledging), what methods do lenders use to determine the collateral’s worth?
Is it as simple as taking the number of shares times the current share price and then subtracting a haircut percentage?
Is it same as how retail investors raise margin on their holdings. Or is there another method they prefer?
What could be the typical haircut percentage for shares pledged by promoters?
If the market price of a company falls into the haircut range, how quickly do finance companies start the margin call process?
If anyone has information about this, I would love to hear your thoughts.