How to Apply for Loan Against Securities

Learn how to apply for a loan against securities with our comprehensive step-by-step guide. Discover eligibility criteria, required documents, and expert tips to ensure a successful application.
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3 mins read
15-September-2025

When market opportunities arise or unexpected expenses appear, liquidity can make all the difference. Yet, selling your long-term investments is not always the smartest move especially when those assets continue to generate potential returns. A loan against securities offers a practical middle ground. It allows you to unlock the value of your investments without parting with them, giving you instant access to funds while your portfolio continues to work for you. Whether it’s for business expansion, personal needs, or an emergency, this option ensures your financial plans stay on track.

Need quick liquidity without selling your portfolio? Apply for a loan against securities and access funds while your investments keep growing.

Who should consider a loan against securities?

A loan against securities is ideal for investors or high-net-worth individuals who need quick liquidity without selling their investments. It suits those seeking short-term funds for business expansion, emergencies, or personal expenses while continuing to benefit from potential market gains. Borrowers with a strong, diversified portfolio can leverage their holdings effectively without disrupting long-term financial goals.

Eligibility criteria for Loan Against Securities

A loan against securities is best suited for individuals who have built a strong investment portfolio and wish to retain ownership of their assets. It’s particularly beneficial for:

  • Investors or high-net-worth individuals (HNIs): Who need short-term liquidity for business or personal use.
  • Business owners: Looking to expand operations or meet working capital requirements.
  • Individuals facing emergencies: Such as medical expenses, education costs, or property down payments.
  • Professionals or entrepreneurs: Wanting to use existing investments to manage short-term financial gaps.

This option allows you to continue enjoying dividends, interest, and potential market gains all while your securities stay invested.

Eligibility criteria for Loan Against Securities

The eligibility criteria for a loan against securities may vary between financial institutions, but general requirements include:

  • Age: The applicant must be at least 18 years old.
  • Type of securities: Shares, bonds, mutual funds, or other marketable securities are usually accepted as collateral.
  • Ownership: The applicant should have legal ownership of the securities.
  • Income stability: A steady source of income or financial stability is often required.
  • Minimum value of Securities: Lenders typically set a minimum value for the pledged securities to qualify for the loan.
  • Credit score: A good credit history can impact the loan approval and interest rate.
  • KYC compliance: Applicants must fulfil Know Your Customer (KYC) norms with valid identification and address proof.
Loan Against Shares
Loan Against Mutual Funds

Steps to apply for a Loan Against Securities

Understanding how to apply for a loan against securities makes the process quick and hassle-free. Here is a simple breakdown:

  1. Choose your lender: Compare different banks and NBFCs for interest rates, LTV ratio, and processing speed.
  2. Submit your application: Fill in the form online or at the branch, specifying loan details.
  3. Pledge your securities: Provide eligible assets as collateral ensure they meet the lender’s LTV requirements.
  4. Submit documents: Attach your KYC proofs, PAN, and DEMAT statement or relevant ownership proof.
  5. Loan processing: The lender evaluates your securities and credit profile before finalising approval.
  6. Disbursal of funds: Once approved, funds are credited directly to your account.

The entire process is typically quick often completed within 24–48 hours for eligible applicants.

Need funds urgently? Apply for a loan against securities online and enjoy instant disbursal within days.

Documents required for application

Applying for a loan against securities requires the submission of certain documents to verify identity, financial status, and ownership of securities. Common documents include:

  • KYC documents: Aadhaar/ passport/ voter’s ID
  • PAN card
  • DEMAT holding statement

Having these documents ready ensures a smooth and quick loan approval process.

Advantages of Loans Against Securities

Loan against securities offers several benefits:

  • Easy disbursal: Loans are processed quickly, making it an efficient option for emergencies depending on the
  • No need to sell Securities: Borrowers can access funds without selling their shares, bonds, or mutual funds.
  • Lower interest rates: The interest rate on loans against securities is generally lower than unsecured loans, as the risk to the lender is reduced by the collateral.
  • Flexible repayment: Borrowers can choose between paying interest only or repaying both interest and principal together.
  • Continuous ownership of investments: Even though the securities are pledged, borrowers still benefit from dividends and interest earnings on them.
  • Custom loan amounts: The loan amount is typically based on the value of the securities, allowing flexibility in borrowing.

These advantages make loans against securities an attractive financial solution for those needing liquidity without giving up their investments.

Mistakes to avoid while applying loan against securities

When applying for a loan against securities, borrowers should be cautious of the following mistakes:

  • Over-leveraging: Borrowing more than required may lead to financial stress, especially if the value of the pledged securities drops.
  • Ignoring the fine print: Always read the terms and conditions carefully to avoid hidden charges or fees.
  • Not monitoring the value of Securities: A drop in the market value of your securities could result in a margin call, where you might have to provide additional funds or securities.
  • Missing repayment deadlines: Failing to repay on time can result in penalties or the lender selling off the securities.
  • Underestimating interest rates: Even though interest rates are lower, not understanding how they accumulate over time can lead to larger-than-expected repayments.

Avoiding these common errors can help borrowers fully maximise the benefits of loans against securities.

How the loan-to-value (LTV) ratio works?

The loan-to-value (LTV) ratio determines how much you can borrow against your securities. For instance, if your shares are worth Rs. 10 lakh and the LTV is 50%, you can borrow up to Rs. 5 lakh.

LTV varies based on the security type equities usually have a lower ratio than debt or mutual funds due to market volatility. Lenders also review LTV regularly to ensure it remains within limits, especially if market prices fluctuate.

Factors to consider before applying

  • Before deciding how to get a loan against securities, consider:
  • Current market conditions: Market downturns can affect your collateral value.
  • Repayment capacity: Ensure you can manage interest or EMIs comfortably.
  • Loan purpose: Use funds strategically for business growth, education, or emergencies.
  • Tenure and charges: Compare prepayment options and fees.

Planning your loan wisely helps maintain financial balance and prevents portfolio disruption.

Why choose a loan against securities over other credit options?

Unlike personal loans or credit cards, a loan against securities allows you to borrow at lower interest rates, with flexible terms and minimal documentation. Moreover, your investments continue to grow, offering both liquidity and wealth retention something traditional loans cannot match.

Conclusion

A loan against securities is a convenient way to meet financial goals without liquidating your investments. Whether you’re funding a new business, managing a temporary cash crunch, or planning a major expense, it offers both flexibility and control. By understanding how to apply for a loan against securities, staying aware of eligibility norms, and avoiding common pitfalls, you can access funds seamlessly while your portfolio continues to grow.

Turn your portfolio into a ready source of liquidity. Apply for a loan against securities today and meet your financial goals without giving up your investments.

Frequently asked questions

What securities can I pledge?
You can pledge shares, mutual funds, bonds, government securities, and insurance policies as collateral for a loan against securities. The lender will assess the value of these assets to determine loan eligibility.

How does the interest rate work?
Interest rates for loans against securities are typically lower than unsecured loans. The rate is determined based on the type of securities pledged and the lender’s policies, with interest charged on the outstanding loan amount.

What happens if the value of my securities drops?
If the value of your pledged securities falls, the lender may issue a margin call. You’ll be required to provide additional securities or funds to maintain the loan-to-value ratio, or risk the lender selling your securities.

Can I prepay my loan?
Yes, most lenders allow prepayment of loans against securities. However, some may charge a prepayment penalty or fee, so it's important to check the terms of your loan agreement beforehand.

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