Loan Against Equity Shares

Need urgent liquidity? Get a Loan Against Shares with easy documentation, low interest, and real-time share valuation. Pledge shares and borrow without selling.
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3 mins
27-December-2025

Ever found yourself in need of funds but hesitant to sell your valuable equity shares? Good news! With a Loan Against Shares (LAS), you can leverage your investments without parting with them. Let's explore how this works and how you can benefit.

What is a loan against equity shares?

Imagine having the ability to access funds by using your equity shares as collateral, all without selling them. That's precisely what a Loan Against Shares offers. You pledge your shares to a lender, and in return, you receive a loan amount based on the value of those shares. It's a smart way to meet financial needs while keeping your investment portfolio intact.

What is an equity collateral loan?

An equity collateral loan is a secured loan where you pledge listed equity shares as collateral to raise funds without selling your holdings. It’s commonly used by investors and high-net-worth individuals seeking liquidity for short-term needs. While often used interchangeably with terms like Loan Against Securities (LAS) or margin loans, there are key differences. LAS is a broader category that includes mutual funds, bonds, and insurance policies, while a margin loan typically supports trading activity. An equity collateral loan specifically involves pledging listed shares for personal or business financing.

Loan-to-Value (LTV) and interest rates

Loan-to-Value (LTV) ratio determines the maximum amount you can borrow against the market value of your pledged shares typically capped at 50% as per SEBI regulations. So, for shares worth Rs. 10 lakh, the loan amount may be up to Rs. 5 lakh. Interest rates vary by lender, loan size, and profile, usually ranging between 8% and 15% p.a. It’s important to note that if market prices fall, your LTV may rise, prompting a margin call or need for additional collateral. Lenders may also revise terms based on market volatility.

Features & benefits of loan against equity shares

Ever wondered if you could tap into your shareholdings without selling them? With a loan against equity shares, you absolutely can.

Let’s take a look at why this is a smart financial choice:

  • No need to liquidate your shares: You retain ownership and continue to earn dividends or capital gains.
  • Instant liquidity: Get quick access to funds while your portfolio continues to grow.
  • Flexible tenure: Choose repayment periods that match your financial plans—short-term or long-term.
  • Minimal documentation: Enjoy a hassle-free application process with fewer formalities.
  • Attractive interest rates: Typically lower than unsecured loans.

Got a strong equity portfolio? Don’t let it sit idle. Apply for a loan against shares now and unlock value instantly.

How does a loan against equity shares work?

Think of this as pledging your shares in exchange for funds, without losing ownership.

Here’s how the loan against equity shares process unfolds:

  1. You pledge your shares to the lender through a demat account.
  2. The lender calculates the loan amount based on a set Loan-to-Value (LTV) ratio generally up to 50% of your share’s market value.
  3. Once verified, the amount is disbursed directly to your account.
  4. You can repay through EMIs or choose an interest-only repayment structure with bullet payment for the principal.

The lender will monitor your share value. If prices dip significantly, you may be asked to pledge more shares or partially repay the loan.

Learn more about: Loan against shares process

Loan Against Shares
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Advantages of loan against equity shares

Let’s say you need Rs. 5 lakh urgently for a business opportunity or medical emergency. Selling your stocks may trigger capital gains tax, or worse, make you miss future rallies.

This is where a loan against equity shares shines.

Here’s why:

  • No disruption to wealth creation.
  • Speedy processing loan sanctioned in 24–48 hours.
  • Zero end-use restrictions use funds for anything from travel to tuition to working capital.
  • Low borrowing cost compared to credit cards or unsecured loans.

Read more - Pros and cons of taking loan against shares

Process of availing a loan against equity shares

Getting started is easier than you think. Here’s a step-by-step guide:

  1. Check eligibility: You should be an Indian resident with listed equity shares in your name.
  2. Apply online or offline: Choose your preferred mode—digital or assisted.
  3. Submit documents: Basic KYC and shareholding details.
  4. Share pledge setup: The lender will initiate a pledge through your demat account.
  5. Loan disbursement: Once the pledge is confirmed, your loan is released—usually within a day.

Why wait for liquidity when your portfolio can fund your goals? Apply now

Eligibility criteria and documents required for loan against equity shares

A loan against equity shares is offered to individuals who hold eligible listed shares in their demat account. Since the loan is secured against your investments, the eligibility requirements are usually simpler and faster compared to unsecured loans.

Eligibility criteria

  • You must be an Indian resident individual with a valid PAN.
  • Shares should be held in a demat account with approved depositories.
  • Only lender-approved, listed equity shares are accepted as collateral.
  • The market value of shares must meet the minimum loan eligibility.
  • Applicants must be within the prescribed age limit set by the lender.
  • NRIs are generally not eligible for this facility.

Documents required

  • Identity proof such as PAN card.
  • Address proof like Aadhaar card, passport, or utility bill.
  • Demat account details and holdings statement.
  • Bank account details for loan disbursal and repayment.
  • Basic KYC documents as per regulatory norms.

Why consider a loan against shares?

Here are some compelling reasons:

  • Retain Ownership: Your shares remain yours. You continue to benefit from dividends and potential appreciation.
  • Quick Access to Funds: The approval and disbursal process is swift, providing timely financial support.
  • Flexible Loan Amounts: Borrow according to your needs, with loan amounts determined by the market value of your pledged shares.
  • No Usage Restrictions: Use the funds for any purpose—be it personal, business, or investment-related.
  • Competitive Interest Rates: Enjoy lower interest rates compared to unsecured loans, making it a cost-effective option.

What to avoid while availing of a loan against equity shares?

Getting a loan against equity shares is a smart move but only if done right.

Here’s what to avoid:

  • Pledging highly volatile stocks: A sharp fall could trigger margin calls.
  • Over-borrowing: Stay within your repayment capacity.
  • Ignoring LTV ratios: Keep track of how much your lender is willing to finance against your portfolio.
  • Missing payment deadlines: It could impact your credit score and ownership of shares.
  • Assuming all shares are eligible: Only listed, approved shares can be pledged.

Conclusion

A loan against equity shares isn’t just a financing tool it’s a liquidity strategy that lets your investments work double time. Whether you are planning to fund your startup, cover urgent medical costs, or simply need liquidity for a short-term crunch, this option gives you flexibility without letting go of your long-term growth potential.

Own shares? You already hold the key to instant funds. Tap into your equity with a loan against shares, no selling, no stress.

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Frequently asked questions

What is the limit of loan against equity shares?

The limit of a loan against equity shares depends on factors such as the value and volatility of the shares, borrower's creditworthiness, and lender's policies. Typically, lenders offer loans up to a certain percentage of the market value of the shares pledged as collateral.

What is equity collateral?

Equity collateral refers to assets, such as stocks, bonds, or mutual funds, pledged as security for a loan. Lenders may accept equity collateral to mitigate the risk of default, allowing borrowers to access financing at favorable terms.

Can I use my equity as collateral?

Yes, you can use equity in assets like investment portfolios as collateral for loans. Lenders often accept equity in various forms, including stocks, bonds, or mutual funds, providing borrowers with flexibility in securing financing.

What happens if share prices fall after taking the loan?

If share prices fall, the value of your pledged collateral decreases, which may breach the permitted Loan-to-Value (LTV) ratio. In such cases, the lender may issue a margin call asking you to either pledge more shares or partially repay the loan to restore the required LTV.

How do I apply for a loan against shares with Bajaj Finserv?

You can apply online through the Bajaj Finserv website by filling out a simple application form, selecting the securities you wish to pledge, and uploading basic documents. Once verified, the loan is approved, and the amount is disbursed to your account within 24 to 48 hours.

Is interest charged only on the amount utilised?

Yes, interest is charged only on the amount you draw from the sanctioned loan limit, not the entire approved limit. This makes the loan against shares a cost-effective credit option, especially for short-term or flexible funding needs where you may not use the entire amount upfront.

What is a loan against equity shares and how does it work?

A loan against equity shares is a secured credit facility where you pledge eligible listed shares as collateral. The lender sets a credit limit based on share value, and interest is charged only on the amount you actually use.

How much can I borrow as a loan against my shares (LTV)?

The loan amount depends on the loan-to-value (LTV) ratio, usually capped at a fixed percentage of the shares’ current market value. The exact LTV varies by share type, volatility, and regulatory guidelines.

What interest rates apply to loans against equity shares?

Interest rates are generally lower than unsecured loans because shares act as collateral. Rates depend on market conditions, lender policies, share quality, and utilisation. Interest is typically charged only on the utilised loan amount.

Which securities are eligible for pledging?

Only approved, listed equity shares with adequate liquidity are accepted. Shares must be held in demat form and appear on the lender’s approved list. Illiquid, penny, or restricted stocks are usually not eligible.

Will I continue to receive dividends on pledged shares?

Yes. Even after pledging, you remain the owner of the shares. Dividends, bonuses, and other corporate actions are credited to your account, unless adjusted against dues as per the loan agreement.

How long does disbursal take after pledging shares?

Once shares are successfully pledged and documentation is completed, disbursal is usually quick. In most cases, funds are credited within the same day or within 24 working hours, subject to verification.

What is a margin call and how will I be notified?

A margin call occurs when the value of pledged shares falls below the required level. You are notified through SMS, email, or app alerts, asking you to restore the margin within a specified timeframe.

What options do I have if a margin call occurs?

You can meet a margin call by adding more eligible shares, repaying part of the outstanding loan, or providing additional funds. Timely action helps avoid forced sale of pledged securities.

Are there foreclosure or prepayment charges on these loans?

Many lenders allow part-prepayment or foreclosure without heavy penalties, especially for overdraft-style facilities. However, charges, if any, depend on the lender’s terms and should be checked in the loan agreement.

What happens if I default on the loan against shares?

If you fail to repay or respond to margin calls, the lender has the right to sell pledged shares to recover dues. Defaults may also impact your credit profile and future borrowing ability.

How is the pledged share value calculated (price/timing)?

The value is calculated based on prevailing market prices, usually using the closing or average price of recent trading sessions. Regular revaluation is done to account for market movements and volatility.

Are there regulatory limits or RBI rules for loans against shares?

Yes. Loans against shares are governed by guidelines issued by the Reserve Bank of India, including caps on LTV, eligible securities, and risk management norms to protect both borrowers and lenders.

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