What is pledging of shares?

Share Pledge by Promoters term have been making headline on Blue channel and news paper after the atrocious and devastating fall we saw in Mid caps in last week of February. It began with Sell off in couple of mid caps shares in last week of feb spread as a contagion to many other stocks eroding 40-80% of market capital of companies in matter of 2 weeks.

Stock market investor and traders if they refresh theie memories similar fall had happened in Jul 2012 and Nov 2011.Brokers tracking the midcap space and officials at some non-banking finance companies say the contagion has been caused by group pledging of shares by companies who were unable to raise funds against these shares, individually. 

So question arise in Why promoters pledge shares of their companies?

Promoters pledge share to raise funds for numerous reasons ranging from personal needs to business ..

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