₹25,000 - ₹25 Cr
Loan of up to 80% of policy value| Funding against policies under lock-in period
Overview
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What is a loan against securities?
Approved securities are financial instruments that the government or regulatory bodies notify as acceptable for various financial and legal purposes. Banks, insurance companies, and NBFCs recognise them as secure investments that can be pledged as collateral for loans or used to meet statutory requirements.
Simply put, they are the “trustworthy” securities that both lenders and regulators consider safe.
Definition of approved securities
Approved securities can be defined as securities specifically notified under law or by the Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI), or other bodies, which can be used to meet legal obligations or as collateral for borrowing. For instance, government bonds, Treasury bills, and certain debentures fall under this category.
List of approved securities in India
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Here are some commonly recognised approved securities in India:
- Central Government securities (like Treasury Bills, Government Bonds)
- State Government securities
- Certain debentures and bonds specified by the RBI or SEBI
- Securities issued under specific government schemes
- Other instruments are notified by regulatory authorities from time to time
| Category | Examples |
|---|---|
| Government securities | Treasury Bills, Dated Government Bonds |
| State securities | State Development Loans (SDLs) |
| Corporate securities | Debentures approved by RBI/SEBI |
| Others | Securities notified under special schemes |
Types of approved securities
Approved securities can be broadly classified into the following types:
- Government securities – Bonds and bills issued by the Central or State Government.
- Treasury bills (T-bills) – Short-term debt instruments issued by the government.
- State development loans (SDLs) – Bonds issued by state governments for funding projects.
- Approved debentures – Specific corporate debentures recognised by RBI/SEBI.
- Other notified securities – Instruments that regulators notify from time to time.
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Use of approved securities in loans and financial products
How to apply for Bajaj Finance loan against shares
Approved securities are mainly used in:
- Collateral for loans – Investors can pledge them to access loans without liquidating investments.
- Statutory requirements – Insurance companies and banks must hold approved securities to meet solvency norms.
- Investment portfolios – Considered safe options, often included in conservative investment strategies.
For borrowers, pledging approved securities ensures lower interest rates compared to unsecured borrowing. For institutions, it creates a safety net
Why are approved securities important for investors and lenders?
For investors, approved securities provide dual benefits: earning returns and enabling access to liquidity. They reduce the need to sell assets in emergencies. For lenders, approved securities act as secure collateral. Since these instruments have government backing or regulatory approval, the risk of default is lower. Thus, approved securities help maintain financial stability for both sides.
Regulatory bodies governing approved securities in India
Features & Benefits for Bajaj Finance loan against shares
The framework for approved securities is shaped by multiple authorities:
- Reserve Bank of India (RBI) – Governs the use of securities by banks and NBFCs.
- Securities and Exchange Board of India (SEBI) – Regulates corporate securities and capital markets.
- Insurance Regulatory and Development Authority of India (IRDAI) – Defines approved securities for insurance companies.
- Government of India – Issues notifications regarding securities from time to time.
| Authority | Role |
|---|---|
| RBI | Guidelines for banks/NBFCs |
| SEBI | Approval of corporate securities |
| IRDAI | Rules for insurers |
| Government | Legal notifications |
Difference between approved and non-approved securities
Not all securities qualify as “approved”. Here is how they differ:
| Aspect | Approved securities | Non-approved securities |
|---|---|---|
| Recognition | Notified by law/regulators | Not legally recognised |
| Use in loans | Accepted as collateral | Usually not accepted |
| Risk | Considered safe | Risk varies, often higher |
| Examples | Government Bonds, T-bills | Unlisted shares, speculative assets |
Approved securities for Loan Against Securities (LAS)
Eligibility criteria for Bajaj Finance loan against shares
For loans against securities, only certain types qualify as approved collateral. These typically include:
- Listed shares
- Mutual fund units
- Government bonds
- Certain debentures and ETFs
- Other instruments allowed by RBI/SEBI
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How to check if a security is approved?
You can verify if a security is approved through:
- RBI notifications and circulars
- SEBI guidelines and approved lists
- IRDAI regulations for insurers
- Official government notifications
- Checking with your bank or financial institution before pledging
Documents required to pledge approved securities
When pledging approved securities for a loan, you typically need:
- One recent photograph and one of the officially Valid documents: Aadhaar, Voter ID Card, Passport, Driving License, NREGA Job Card, Letter issued by National Population Register
- In case current addres is not available on OVD, any one of the deemed to be officially valid document: Utility bill, Property or Municipal tax receipt, Pension or Family Pension Payment Orders (PPOs), 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
- Demat account details (for shares/bonds)
- Mutual fund statement (for MF units)
- Loan application form
Risks involved in using approved securities as collateral
While approved securities are generally safe, some risks remain:
- Market risk – The value of securities can fluctuate, affecting loan eligibility.
- Margin calls – If the value drops below the required margin, the lender may demand additional collateral.
- Liquidity risk – Some securities may be difficult to sell quickly if needed.
- Foreclosure risk – Lenders can sell securities if repayment obligations are not met.
Conclusion
Approved securities play a vital role in India’s financial ecosystem, serving as trusted instruments for both investment and borrowing. They provide safety for lenders, flexibility for borrowers, and stability for the market. For anyone seeking funds without disturbing their portfolio, pledging approved securities is one of the smartest solutions.
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Frequently asked questions
General
What qualifies as an approved security in India?
Approved securities are financial instruments notified by the government or regulators like RBI, SEBI, or IRDAI. These include government bonds, Treasury bills, state development loans, and certain corporate debentures. They are considered safe, legally recognised, and accepted by financial institutions for meeting statutory requirements or pledging as collateral.
Can I use approved securities to get a loan?
Yes. Approved securities are widely accepted as collateral for loans by banks and NBFCs. By pledging them, you can access liquidity without selling your investments. This helps borrowers unlock funds at lower interest rates, while lenders gain confidence due to the security’s reliability and regulatory recognition.
Who decides which securities are approved?
The government and financial regulators such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Insurance Regulatory and Development Authority of India (IRDAI) decide which securities qualify as approved. Notifications and guidelines are issued periodically, defining the instruments that institutions must or may accept.
What is the difference between approved and listed securities?
Approved securities are those specifically recognised by law or regulators for legal, investment, or borrowing purposes. Listed securities are those traded on recognised stock exchanges. While listed securities may be approved, not all listed instruments qualify as approved securities, as approval depends on regulatory notification, not just stock exchange presence.
Disclaimer
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