What is a Collateral Security Loan?

Collateral security refers to any asset like shares, mutual funds, bonds, or insurance policies that you pledge to secure a loan. It acts as a safety net for the lender, ensuring that they can recover the loan amount if you default. The asset remains in your name, but the lender holds a temporary claim over it until the loan is fully repaid. In short, collateral security is a loan enabler, not a substitute for your investment.

A loan against collateral security is a secured credit facility where you pledge your financial assets like shares, mutual funds, bonds, or insurance policies to avail funds. The amount you can borrow depends on the Loan to Value (LTV) ratio of the pledged assets.

The best part? The ownership of your securities stays with you. You continue to earn dividends or interest while using your assets as a financial cushion.

In essence, collateral security is a loan tool that helps you handle planned and unplanned expenses without breaking long-term investments.

Let’s say you have an urgent requirement of Rs. 5 lakh to invest in business expansion. Selling your mutual funds now could mean incurring capital gains tax or booking losses in a bearish market. A smarter option? Pledge those mutual funds and get a loan, quickly and efficiently.

Key benefits:

• Speedy disbursal – Funds can be released within 24–48 hours
• Continued asset ownership – You retain rights and earnings on the security
• Competitive interest rates – Lower than most unsecured loan options
• Flexible repayment – Interest-only EMI options are available
• No end-use restriction – Use the funds as you wish

Minimal paperwork is another big plus. Here’s what you’ll need:

Official Valid Documents (OVDs):

• Identity proof: Aadhaar card, PAN card, passport, voter ID, or driving license
• Address proof: Utility bill, Aadhaar, passport, or driving license

Financial documents:

• Salary slips, IT returns, or audited business financials
• Latest six months’ bank account statements
• Investment proof (shares/mutual fund holdings, bond certificates, policy documents)

Others:

• Completed and signed loan application form

You might be wondering what exactly counts as a “collateral security”? Here’s a look at commonly accepted assets:

1. Equity shares

Get funds by pledging listed shares. As their market value fluctuates, your LTV eligibility might vary daily.

2. Mutual funds

Both equity and debt mutual funds are accepted. You can continue to benefit from NAV appreciation while using them as collateral.

3. Insurance policies

Life insurance with a surrender value can also be used. Policies from reputed insurers typically qualify.

Have shares or mutual funds lying idle? Put them to work. Apply for a LAS today

Let’s break it down with an example.

You own shares worth Rs. 10 lakh. The lender offers you an LTV of 50%. You’re eligible for a loan of up to Rs. 5 lakh.

• Your shares are pledged but not sold.
• The loan is credited to your account.
• You pay interest only on the amount you use.
• Once repaid, your securities are unpledged.

It’s that simple. This type of loan offers immense flexibility and control, especially during cash crunches.

Not sure if this fits your financial journey? Here are a few scenarios where this solution works brilliantly:

1. Business funding

Need working capital or want to upgrade equipment? Use your investments to raise funds without approaching investors or selling assets.

2. Medical emergencies

Access immediate liquidity without tapping into your savings.

3. Travel or education expenses

Planning a family vacation or need funds for higher education abroad? A loan against specified security can help, without putting your savings at risk.

4. Market downturns

When markets are down, selling securities may lead to losses. A loan lets you hold on and wait for a rebound.

You may be tempted to take a personal loan or swipe a credit card for quick funds. But here’s a quick comparison:

Smarter than selling, better than unsecured borrowing. Use your securities to raise funds affordably. Apply for a loan now

If you have ever thought of getting a loan without giving up on your investments, then a loan against collateral security is the answer. It combines the safety of asset retention with the flexibility of fund access. Whether you are an entrepreneur, a salaried professional, or an investor this financial product empowers you to turn your portfolio into a powerful resource. And with trusted lenders offering streamlined digital journeys, getting started has never been easier.

Ready to make your investments work harder for you? Apply for a loan against securities today