Benefits of Loan Against Securities

Loan Against Shares offers several features that can improve borrowing flexibility and portfolio management.

• Flexible loan amounts: Borrowing capacity depends on eligible collateral value and applicable LTV.
• Flexible repayment: Repayment options depend on the facility and lender terms.
• Revolving facility: Some structures allow borrowers to withdraw funds from available drawing power.
• Online management: Digital platforms can provide access to statements and loan information.
• Flexible tenure: Certain facilities offer tenures ranging from seven days to 36 months. 
• Continue earning dividends: Eligible pledged shares can continue earning dividends. 
• Interest on utilised amount: Applicable facilities charge interest on the amount actually utilised.
• Demat flexibility: Eligible shares can be pledged from accepted Demat accounts.
• Dynamic borrowing capacity: Changes in share value can affect available borrowing capacity.

• Security substitution: Some facilities allow eligible pledged shares to be swapped during the tenure.

  
  

The available features depend on the lender, security type, and applicable facility terms.

Loan Against Securities (LAS) can provide several advantages for investors requiring liquidity.

Immediate liquidity without selling assets

The primary benefit is accessing funds without immediately selling eligible investments.

• Helps avoid selling during unfavourable market conditions.
• Allows investors to retain ownership of pledged securities.
• Can address temporary personal or business funding requirements.
• May reduce the need to disturb long-term investment allocations.

However, pledged investments can still decline in market value.
Borrowers should maintain sufficient collateral against applicable Loan-to-Value requirements.

Lower interest rates

Loan Against Securities (LAS) is secured because eligible investments serve as collateral.

• Secured borrowing can offer competitive rates compared with some unsecured facilities.
• The applicable rate depends on security type and borrower profile.
• Total borrowing cost should include interest and applicable charges.
• Comparing the complete facility cost supports better financial decisions.

The interest advantage varies between lenders and individual loan offers.

No impact on investment gains

Pledging eligible investments does not ordinarily transfer ownership to the lender.

• Investors can remain invested in eligible securities.
• Eligible pledged shares can continue receiving dividends.
• Market-linked investments can continue participating in potential price appreciation.
• Investment returns remain subject to normal market risks.

Therefore, pledging investments preserves market exposure but does not guarantee future returns.

Quick processing and disbursal

Securities can generally be verified using digital ownership and valuation records.

• Demat holdings can simplify ownership verification.
• Market prices provide an accessible basis for collateral valuation.
• Pledge creation can complete the security process.
• Funds can be disbursed after required verification and pledge creation.

Loan Against Shares can suit investors who require liquidity without immediately selling eligible investments.

Consider it when you:

• Need funds for urgent personal requirements.
• Need temporary business working capital.
• Want to manage short-term cash flow gaps.
• Prefer retaining long-term investments.
• Require flexible access to available borrowing capacity.
• Want to avoid redeeming investments for temporary requirements.

• Have sufficient eligible securities to support the required borrowing.

  
  

Loan Against Securities (LAS) may be less suitable when your collateral is highly volatile. It may also be unsuitable when your repayment capacity is uncertain.

Eligibility depends on the borrower's profile, ownership of approved securities, and applicable lender requirements.

The above criteria are currently stated for eligible Loan Against Shares facilities. 

The application process involves confirming eligibility, selecting securities, completing verification, and creating the pledge.

Documentation

Keep the following documents ready before beginning the application:

• PAN card
• Accepted KYC document
• Latest Demat holding statement

• Additional documents requested during verification

  
  

Loan valuation

The lender evaluates the eligible shares offered as collateral.

• Current market value influences the available borrowing amount.
• Applicable LTV determines the permissible borrowing limit.
• Security eligibility also affects the available facility.

• Market movements can change the borrowing capacity after approval.

  
  

Application review

The lender verifies borrower details, security holdings, and applicable eligibility conditions.

The facility proceeds after successful verification and completion of required pledge formalities.

Applying for Loan Against Shares involves several straightforward stages.

Steps

1. Eligibility check: Confirm your age, residency, employment, and eligible securities.
2. Select a lender: Compare applicable interest rates, charges, tenure, and facility terms.
3. Prepare documents: Keep KYC documents, PAN, and Demat statements ready.
4. Submit application: Provide the required borrower and security details online.
5. Collateral assessment: The lender evaluates your eligible securities and applicable LTV.
6. Review offer: Check the sanctioned amount, interest rate, charges, and repayment terms.
7. Create pledge: Complete the required pledge process for approved securities.
8. Receive funds: Disbursal follows successful verification and pledge creation. 

Loan Against Securities (LAS) can provide liquidity without requiring immediate liquidation of eligible investments. Its benefits include investment retention, flexible utilisation, and potentially competitive secured borrowing costs. Loan Against Shares can be useful when temporary financial requirements arise.

However, pledged securities remain exposed to market fluctuations throughout the borrowing period. Borrowers should compare interest rates, charges, LTV requirements, and repayment terms before applying.

Stay invested, stay liquid. Leverage your shares for instant funds today without missing out on future growth. Apply for loan against shares today!