Why is a stock put under surveillance for high promoter encumbrance?

A stock may be under surveillance for high promoter encumbrance when the promoters have pledged a significant portion of their shares as collateral for loans or debts, which can create a potential risk for the company and its shareholders. When a stock is under surveillance for high promoter encumbrance, the stock exchange or regulator is monitoring the situation closely and may take action if necessary. Investors should carefully consider the potential risks and benefits of investing in such a stock and monitor any developments related to the encumbrance situation.