Advances Against Various Securities

Advances against various securities are secured loans backed by financial assets. Understand their meaning, structure, and common use cases.
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3 mins read
13-January-2026

Sometimes, you may need quick access to funds but do not want to sell your investments. That’s exactly what advances against securities help you do. By pledging your shares, or mutual funds, you can borrow money while still earning dividends or interest on them. The loan amount depends on the market value of your securities, and you can enjoy flexible repayment options. It’s a smart way to unlock liquidity without breaking your long-term investment goals.

Need funds but do not want to sell your investments? Apply for a loan against securities and access instant liquidity while your portfolio keeps growing.

What are advances against securities?

Many investors hold shares, mutual funds, or bonds for long-term goals but what happens when you need funds urgently? Rather than selling your investments, you can use them to get a loan. That’s exactly what an advance against securities allows you to do. It is a simple and smart way to borrow money by pledging your market-linked investments as collateral. You still own your portfolio and continue to earn dividends or interest while the lender holds the securities until repayment.

Benefits of advances against securities

Advances against securities allow you to unlock liquidity without selling your investments. By pledging financial assets such as shares, or mutual funds, you can meet short-term or strategic funding needs while staying invested. Key benefits include:

  • Quick access to funds: Faster processing since the advance is backed by liquid, market-linked securities.
  • Lower interest cost: Typically cheaper than unsecured loans because the advance is secured.
  • Retain ownership benefits: You continue to benefit from potential capital appreciation, dividends, or interest on the pledged securities.
  • Flexible usage: Funds can be used for personal needs, business expenses, or investment opportunities.
  • Pay interest only on utilisation: In overdraft-style facilities, interest is charged only on the amount you actually use.

Enjoy lower interest rates and flexible withdrawals. Meet your short-term funding needs today. Explore loan against securities

How advances against securities work

When you take an advance against securities, your lender evaluates the type and market value of your investments. You receive a loan amount based on a percentage of this value known as the loan-to-value ratio (LTV).

You remain the owner of your securities and can still benefit from them. However, you must maintain the required margin to manage market fluctuations. If the value of your securities drops, you might have to add more collateral or repay a portion of the loan. It is a transparent process designed to help you access funds without disrupting your financial plans.

Loan Against Shares
Loan Against Mutual Funds

Eligible securities for loan collateral

Lenders accept a wide range of financial instruments as collateral for advances against securities, such as:

  • Equity shares listed on recognised stock exchanges
  • Mutual funds (equity and debt schemes from SEBI-registered AMCs)
  • ESOPs (Employee Stock Option Plans)
  • Insurance policies with surrender value

The loan-to-value ratio depends on factors like market value, liquidity, and volatility. For example, bonds or debt mutual funds often offer a higher LTV than shares due to lower market risk.

Types of advances against various securities

There are different ways you can get advances against your investments, depending on the kind of security you pledge:

  • Advances against shares: Borrow funds by pledging listed shares. The amount depends on their market value and liquidity.
  • Advances against mutual funds: Both equity and debt mutual funds can be pledged. Debt mutual funds usually qualify for higher LTVs due to lower volatility.
  • Advances against insurance policies: Endowment or ULIP policies with surrender value can be used to secure loans without losing coverage.

Risks and considerations

While advances against securities are convenient, they come with market-linked risks that borrowers must understand before proceeding. Important risks and considerations:

  • Market volatility: A fall in the value of pledged securities can reduce your eligible limit.
  • Margin calls: You may be asked to provide additional securities or repay part of the advance if values decline sharply.
  • Forced liquidation risk: Failure to meet margin requirements may lead to the lender selling pledged securities.
  • Interest rate impact: Although lower than unsecured loans, interest costs can add up if funds are used long-term.
  • Not ideal for long tenures: Best suited for short- to medium-term liquidity needs rather than permanent borrowing.    

Comparison: advances against securities vs. other loan types

Criteria Advances Against Securities Personal Loan Loan Against Property
Collateral Securities (shares, bonds, etc.) None Property
Interest Rates Lower than personal loans Higher due to being unsecured Lower due to real property collateral
Loan Amount Based on market value of securities Fixed based on income or credit score Based on property valuation
Ownership Retain ownership of securities N/A Retain ownership of property


Unlike unsecured loans, advances against securities help you leverage your investments efficiently while continuing to earn returns.

When should you opt for an advance against securities?

An advance against securities works best when you need quick funds for short-term goals business expansion, medical emergencies, education, or market opportunities. It’s also ideal if you want to avoid breaking long-term investments that might have future value. You can repay once your cash flow stabilises, without losing ownership of your assets.

Eligibility criteria and documentation

To apply for a loan against securities, applicants must meet specific eligibility and documentation requirements. Here's a quick breakdown:

Who can apply:

  • Salaried individuals

  • Self-employed professionals

  • Must be an Indian citizen

Basic eligibility parameters:

  • Age: Typically, 21 to 90 years

  • Minimum income: As specified by the lender

  • Minimum security value: Depends on the type and worth of securities pledged

Documents required:

  • PAN card (mandatory)

  • Aadhaar card or any valid government-issued ID proof

  • Demat or mutual fund holding statement

  • Bank account details for disbursal and repayment


These criteria ensure that only eligible, creditworthy individuals with verifiable securities can access funding through this secured facility.

How to apply for advances against securities

Applying for advances against securities is usually a streamlined, digital-first process, especially when securities are held in demat or electronic form. Step-by-step process:

  • Check eligibility: Ensure your securities are eligible and meet the lender’s minimum criteria.
  • Submit application: Apply online or offline with basic KYC and investment details.
  • Pledge securities: Securities are pledged in favour of the lender through a secure mechanism.
  • Limit assessment: The advance limit is calculated based on security type and loan-to-value norms.
  • Access funds: Once approved, funds are credited, and you can withdraw as per the sanctioned limit.

This approach helps you access liquidity efficiently while keeping your long-term investments intact.

Popular banks and financial institutions offering advances against securities

Several major banks and financial institutions in India offer advances against securities. These institutions provide tailored solutions depending on the type of security, with competitive interest rates and flexible repayment options. It’s essential to compare terms and conditions from various institutions to choose the one best suited to your financial needs.

Conclusion

Advances against securities give you the flexibility to access liquidity while keeping your long-term investments intact. Whether it is for personal or business needs, this facility helps you stay financially agile without losing potential market gains. Just remember to borrow wisely, monitor market movements, and maintain the required margin for peace of mind.

Need instant liquidity without selling your investments? Apply for loan against securities and stay financially confident while your portfolio keeps performing.

Frequently asked questions

Can I continue to earn dividends or interest on pledged securities?
Yes, you can continue to earn dividends or interest on the securities you have pledged for a loan. Even though the securities are pledged as collateral, you retain ownership and are entitled to all the benefits they generate.

Can I sell or redeem my securities while they are pledged?
No, you cannot sell or redeem your pledged securities until the loan is fully repaid. The lender holds them as collateral, and selling them before repayment would require their release by the lender.

What happens to my securities after loan repayment?
Once the loan is fully repaid, the pledged securities are released by the lender. You regain full control over them, and you can sell, redeem, or continue holding them as per your financial plans.

What types of securities can be pledged for a loan?

You can pledge listed equity shares, mutual funds (equity or debt), bonds (government or corporate), ETFs, and insurance policies. These securities must generally be held in demat form and meet the lender’s approved list criteria.

How much loan can I get against my securities?

The loan amount depends on the type and market value of the pledged securities. Lenders offer a specific Loan-to-Value (LTV) ratio often ranging between 50% to 90% depending on the security’s risk and liquidity profile.

Will my credit score be affected if I take this loan?

A loan against securities is a secured loan and does not negatively impact your credit score if repayments are made on time. However, delayed payments or defaults may adversely affect your credit history, like any other loan.

How quickly is the loan disbursed?

Loan disbursal is typically fast, often within 24 to 48 hours after document verification and lien marking of securities. Some lenders even offer instant overdraft facilities if the pledged securities are already held with them.

Is there a penalty for prepayment or foreclosure?

Most lenders do not charge any penalty for prepayment or foreclosure of a loan against securities. However, it is advisable to check specific terms and conditions in the loan agreement before proceeding.

Can I top up my existing loan against securities?

Yes, many lenders allow a top-up facility if your pledged securities have appreciated in value or you pledge additional eligible securities. The revised loan limit will depend on the updated valuation and applicable LTV ratio.

What happens if the market value of my securities falls?

If the market value of your pledged securities drops significantly, the lender may ask you to pledge additional securities or partially repay the loan to maintain the required LTV ratio and avoid triggering a margin call.

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