Documentation required
Here is what you will typically need when applying for a loan against securities:
Document type
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Required documents
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Personal identification
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PAN Card, Aadhaar, or Passport,
PAN, Passport, Driving License, Voter ID, Aadhaar, Job Card issued by NREGA, Letter issued by the National Population Register
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Income proof
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Salary slips, bank statements, or income tax returns
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Securities proof
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Demat account details and latest statement
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Other documents
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Duly filled application form and recent passport-size photographs
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In case OVD does not have Current Address of the client, obtain below listed documents which are treated as Deemed to be Officially Valid Documents (DOVD)
a) Utility bill, in the name of the client, which is not more than two months old
b) Property or Municipal tax receipt
c) Pension or Family Pension Payment Orders (PPOs)
d) Letter of Allotment of Accommodation from Employer issued by State Government or Central Government Departments, Statutory or Regulatory Bodies, Public Sector Undertakings, Scheduled Commercial Banks, Financial Institutions and Listed Companies, and Leave & License Agreements with such employers allotting official accommodation
In case a client submits Deemed to be OVD (DOVD) towards Current Address, client must submit an OVD mentioned in (A)(3), updated with Current Address, within three months of submission of the DOVD.
Benefits of advances against stock exchange securities
Opting for advances against stock exchange securities offers several advantages for investors and business owners alike.
1. Quick access to funds
You can secure liquidity almost instantly, ideal for handling urgent requirements such as medical expenses, business payments, or investment opportunities. The process is smooth, with minimal paperwork.
2. Competitive interest rates
Because this is a secured loan, interest rates are typically lower than unsecured options. You’re also charged interest only on the amount you utilise, not the entire sanctioned limit.
3. Retain ownership and returns
You remain the owner of your investments, meaning you can still earn dividends and benefit from market growth even while your securities are pledged.
Types of securities eligible for advances
Advances against securities allow you to raise funds by pledging financial assets you already own. However, not all securities are accepted. Lenders usually approve only those instruments that are liquid, regulated, and easy to value. Commonly accepted options include:
- Equity shares – Listed shares of well-established companies that are actively traded on recognised stock exchanges are widely accepted due to transparent pricing and high liquidity.
- Mutual fund units – Both equity and debt mutual funds can be pledged, provided they fall under the lender’s approved list and meet minimum valuation criteria.
- Bonds and debentures – Government securities, PSU bonds, and high-rated corporate bonds are often eligible because of their relatively stable value.
- Fixed deposits – Bank and NBFC fixed deposits can be used as collateral, offering lower risk and quicker approval.
- Insurance policies – Select ULIP and endowment policies with sufficient surrender value may qualify for advances.
Eligibility depends on factors such as market value, credit rating, liquidity, and regulatory compliance of the security.
Interest rates and charges on advances
The cost of an advance against securities is influenced by the type of security pledged and prevailing market conditions. Key components include:
- Interest rates – Generally lower than unsecured loans, as the advance is backed by collateral. Rates may vary based on the asset type, loan-to-value ratio, and overall risk profile.
- Processing or setup fees – A one-time charge levied during loan approval, either as a flat fee or a percentage of the sanctioned amount.
- Maintenance or renewal charges – Some lenders charge periodic fees to manage and review pledged securities.
- Penal interest – Applied if repayment terms are not met or if margin requirements are breached.
- Other statutory charges – These may include GST or documentation-related costs, depending on the lender.
Understanding the complete cost structure upfront helps you compare options effectively and avoid surprises during the loan tenure.
How to apply for advances against stock exchange securities?
Applying for a loan against shares or other stock exchange securities is a simple, entirely digital process designed for your convenience. Here is how it works:
- Visit the lender’s application portal and start your online journey by selecting the ‘Loan Against Securities’ option.
- Enter your basic details such as name, PAN, and date of birth to create your loan profile.
- Provide and verify your contact information, including your registered email ID and mobile number, to receive updates and authentication codes securely.
- Add the securities you wish to pledge, which may include shares, or mutual funds from approved lists.
- The lender will assess your portfolio’s market value and determine your eligible loan amount, followed by a personalised loan offer with indicative terms.
- Complete the KYC process online by uploading valid identity and address proof for verification.
- Set up an e-mandate to enable automated EMI or interest payments directly from your linked bank account.
- Review and accept the loan agreement digitally to proceed with the pledge.
- Pledge your securities electronically, authorising the lender to hold them as collateral during the loan tenure.
- Once verified, funds are disbursed instantly into your bank account, often within a few working hours.
To ensure a smooth and hassle-free experience, it’s helpful to understand how to pledge securities for loan before starting the application process.
Conclusion
Advances against stock exchange securities are a smart and flexible solution for anyone looking to access short-term funds while keeping their investments intact. You do not have to sell your shares, bonds, or mutual funds you can simply pledge them and continue benefiting from market growth. With competitive rates, digital convenience, and quick disbursal, this financing option gives you the best of both worlds liquidity and long-term wealth creation.
Your investments can do more than grow they can fund your goals. Leverage your securities and get funds instantly. Apply today!
