Loan Against Shares for Emergency Funds

Explore how Loan Against Shares can provide immediate financial support during emergencies. Leverage your existing investments without liquidation and benefit from flexible repayment options.
APPLY NOW
Leverage your shares to avail loan!
APPLY NOW
3 mins
11-September-2025

Emergencies that require a free flow of cash may often come without a warning. Whether it is a medical emergency, urgent home repairs, working capital requirements or unexpected bills, such financial emergencies can leave individuals in a tough situation. Having the right financial resource can help you navigate through such difficult situations with ease. Leveraging emergency liquid savings, taking a personal loan, and breaking FDs are the commonly practiced options for acquiring funds. A better option to consider availing a loan against shares for your emergency fund requirements, which can provide you with the necessary funds while leveraging your existing investments in shares. This borrowing method enables you to continue earning dividends on your shares as you keep them as collateral while availing of a loan against shares.

A loan against shares is a type of loan where you pledge your equity shares as collateral and borrow funds against them. These equity shares act as a security for the lender. The loan amount that may be approved by the lender against the security of shares is determined based on the value of the pledged shares. Loan against shares may be availed from multiple lenders. The loan amount approved by a lender is typically a percentage of the market value of the shares. As per RBI Master Direction, you may be sanctioned a loan up to 50% of your portfolio value by Bajaj Finance Limited. However, any shortfall in the maintenance of 50% loan-to-value ratio due to share price movements shall be adjusted within 7 working days. Availing loan against shares for emergency fund requirements is one of the easiest ways to meet required financing without liquidating investments or borrowing at extremely high-interest rates.

What is a loan against shares?

A loan against shares (LAS) is a secured borrowing option where you pledge your listed shares as collateral to access quick funds. Instead of selling your investments, you temporarily transfer them to a lender (such as a bank or NBFC) to raise liquidity. The lender offers a loan amount based on a percentage of the market value of your pledged shares known as the loan-to-value (LTV) ratio typically up to 50%.

LAS is ideal for investors who wish to meet urgent financial needs without liquidating their portfolio, thus retaining potential market gains and dividends (as per lender policies). You continue to benefit from price appreciation while using the borrowed funds for emergencies, business expansion, or personal requirements. This makes LAS a cost-effective solution compared to unsecured loans, which often carry higher interest rates. With minimal documentation and fast approval, LAS helps you unlock the value of your investments while keeping your long-term financial goals intact.

How does LAS for emergencies work?

LAS for emergencies works by converting your existing shareholdings into instant liquidity without selling them. When faced with urgent financial needs—such as medical expenses, business cash flow gaps, or educational payments—you can pledge eligible shares with a lender and quickly access funds.

The process is straightforward: you request the loan, the lender verifies your shares, and an overdraft limit or lump sum is sanctioned based on the current market value and applicable LTV ratio. Funds are usually disbursed within 24–48 hours. During the loan tenure, your shares remain in your Demat account but are temporarily marked as pledged. You may continue to earn dividends or bonuses, depending on lender terms.

LAS offers flexible repayment options, competitive interest rates, and the ability to unpledge shares once the loan is repaid. It is a smart, cost-efficient choice for emergencies where timing and preserving your investment portfolio are equally important.

Loan Against Shares
Loan Against Mutual Funds

Benefits of using shares for emergency loans

Read on to know more about the advantages of loans against shares for emergency expenses:

1. Easy to apply

Unlike traditional loans that may require extensive paperwork, credit checks, and lengthy approval processes, a loan against shares can be processed quickly, often within a few days. This can be particularly beneficial in financial emergencies where you need access to funds urgently. With Bajaj Finance Limited, subject to terms and conditions stipulated by Bajaj Finance Limited, one may easily get a pre-approved loan against shares of up to Rs. 5 crores by submission of minimum documents. Your loan account may be managed online hassle-free manner.

2. Do not sell but leverage your shares

To get the required financing you need not sell your shares, just leverage them. This means that you can continue to get dividends and other benefits attached to your investments in shares while still having an option of availing funds against your investments in shares. With a loan against shares, you can avoid the need to liquidate your investments and retain your investment portfolio intact.

3. Flexibility

A loan against shares provides flexibility in terms of usage. The funds received through a loan against shares can be used for multiple purposes, such as paying medical bills, funding educational expenses, meeting business requirements, home renovations, or meeting any other emergency expenses. There are no restrictions on the usage of the funds available through a loan against shares, thus providing you with the freedom to use the funds as per your requirements. Also, you need to pay interest only on the loan utilised amount of the loan.

4. Lower interest rates

Traditional borrowing instruments like personal loans and loan against credit card usually levy higher interest rates, but a loan against shares interest rates are typically competitive. Since the loan is secured by pledging of shares in favour of the lender, the lender is at lower risk, which in turn results in lower interest rates. This can make a loan against shares a cost-effective option for emergency funds compared to other forms of borrowings that may come with higher interest rates.

Considering a loan against shares as an option to meet emergency fund requirements can be a good option for those who hold investments in valuable equity shares and need quick access to funds without having to sell their investments or disturbing their portfolio. It can provide the necessary liquidity while retaining the potential for future appreciation in the value of their investments in shares. While opting for a loan against shares it is advisable to explore and compare the benefits offered by different lenders for securing the best deals and also compare pre-payment charges, processing fees, etc. charges by different lenders. Subject to terms and conditions stipulated by Bajaj Finance Limited, you may get a pre-approved loan against shares for up to Rs. 5 crores.

Eligibility criteria and documentation required

To avail of a loan against shares, you must meet the lender’s eligibility norms. Typically, you should be an Indian resident aged between 18 and 90 years with a valid Demat account. Many lenders also extend LAS to companies or HUFs holding listed shares. The shares you pledge must be from the lender’s approved list of securities. The documentation process is simple and usually includes:

  • A valid photo ID (PAN card, Aadhaar, or passport)

  • Proof of address (utility bill, Aadhaar, or voter ID)

  • Latest passport-sized photographs

  • Demat account details and shareholding statement

  • Duly filled loan application form

Some lenders may also request income proofs or bank statements depending on the loan size and your profile. Minimal paperwork ensures quick approval and disbursal.

Key risks of using shares for emergency loans

While a loan against shares provides fast liquidity, it also carries several potential risks that borrowers must carefully consider:

  • Market volatility and margin calls: Share prices can fluctuate sharply. If their value falls below the lender’s required level, you may face a margin call, forcing you to pledge more shares or repay part of the loan.

  • Forced liquidation of shares: Failure to meet a margin call can result in the lender selling your pledged shares to recover dues, potentially at unfavourable market prices.

  • Loss of long-term gains: If your pledged shares underperform or are sold during a downturn, you could miss out on future appreciation or dividends.

  • Interest cost accumulation: Delayed repayment or high loan utilisation can lead to mounting interest charges, increasing your overall cost of borrowing.

  • Reduced portfolio flexibility: Pledging too many shares can limit your ability to rebalance or exit investments, restricting your financial strategy.

Borrowing against shares should be done judiciously assess your repayment ability, monitor market movements, and maintain a financial buffer to manage risks effectively.

Conclusion

A loan against shares is a powerful financial tool for meeting urgent cash needs without liquidating your investments. It allows you to retain ownership of your shares while unlocking liquidity at competitive rates. However, understanding the eligibility requirements, required documents, and potential risks is essential to make informed borrowing decisions. By pledging shares judiciously and monitoring market conditions, you can effectively manage emergencies while protecting your long-term wealth-building goals.

Frequently asked questions

Can I take a loan against my shares?

Yes, you can take a loan against your shares by pledging them as collateral. It allows you to unlock funds without selling your investments, while still retaining ownership and potential capital gains.

What is the maximum limit of loan against shares?

The maximum loan limit depends on the lender and the value of the shares pledged. Some institutions offer loans of up to Rs. 100 crore or more, depending on eligibility, share type, and Loan-to-Value (LTV) ratio.

Can I borrow against the value of my shares?

Yes, you can borrow a certain percentage of your share’s market value, typically up to 50–60%, as per RBI guidelines and lender policies. The sanctioned amount depends on the type and performance of the securities.

Can I take a loan against my stock holdings?

Absolutely. If you hold stocks in demat form, you can pledge them to avail a loan. The process is quick, collateral-backed, and ideal for meeting urgent financial needs without liquidating your investments.

How can I use my shares to get an emergency loan?

You can pledge your listed shares with a bank or NBFC to secure a loan against shares. The lender verifies your holdings, sets a loan-to-value (LTV) ratio, and disburses funds—often within 24–48 hours—without requiring you to sell your investments.

What is the maximum loan amount I can avail?

The maximum loan amount depends on the market value of your pledged shares and the lender’s LTV ratio, typically up to 50%. Some lenders may also impose an upper cap based on their policies. High-value portfolios can unlock substantial emergency funding while retaining your share ownership.

Show More Show Less

Related videos

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.