₹25,000.00 - ₹25 Cr
Loan of up to 80% of policy value| Funding against policies under lock-in period
Overview
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What is a loan against securities?
A loan against securities (LAS) is a credit facility where you pledge your financial investments like shares, mutual funds, or insurance policies as collateral in exchange for a loan.
Instead of liquidating your assets during financial crunches, LAS allows you to raise funds while retaining ownership of your investments.
Did you know? RBI introduced LAS norms under its Master Circular to ensure transparency, fair valuation, and responsible lending practices in the market. The result? A safer credit ecosystem for lenders and borrowers alike.
Get instant funds by pledging your investments no need to sell! Apply for a loan against securities now
Why are RBI guidelines important in loans against securities?
The Reserve Bank of India (RBI) plays a pivotal role in framing regulatory norms for LAS to ensure that borrowers don’t end up overexposed and NBFCs (non-banking financial companies) maintain lending discipline.
Here’s why the RBI guidelines matter:
Borrower protection: You are safeguarded from over-leveraging or unfair loan terms.
Valuation accuracy: The guidelines ensure securities are correctly valued and loan amounts are fairly derived.
Market stability: The rules help reduce the risk of systemic shocks in capital markets.
So, the next time you pledge your portfolio for a loan, know that loan collateral securities RBI guidelines are working silently in your favour.
Key RBI guidelines for loan against securities
How to Secure a Rs. 2 Crore Loan Against Securities Instantly
Let’s break down the most essential RBI guidelines loan against shares and other securities, simplified for everyday borrowers.
1. Eligible lenders
- Only scheduled commercial banks (excluding RRBs) and select NBFCs registered with RBI are permitted to offer LAS.
- These lenders must follow the loan eligibility securities RBI framework.
2. Type of eligible securities
RBI allows loans against:
- Listed shares (equity)
- Mutual funds (equity and debt)
- Government securities
- Life insurance policies with surrender value
Pledging unlisted shares, penny stocks, or speculative instruments is generally restricted.
3. Loan-to-Value (LTV) ratio
This ratio dictates how much you can borrow against your securities. For example:
- Loan against shares: LTV is capped at 50% of the value.
- Loan against mutual funds: LTV can range from 90%, depending on the fund type.
- Loan against insurance: Subject to the lender’s risk appetite and RBI compliance.
4. Margin maintenance
You must maintain a minimum margin (difference between asset value and loan amount) throughout the loan tenure. If markets fluctuate and the value of your securities drops, you may need to top up your collateral.
5. Tenure and usage
- LAS is typically sanctioned as an overdraft facility or term loan for up to 36 months.
- RBI discourages using LAS funds for speculative purposes like margin trading.
6. Disclosures and documentation
- KYC compliance, pledge documentation, and fair disclosure of end-use are mandatory.
- Transparency in processing charges and interest rates is a must.
Get instant funds by pledging your investments no need to sell! Apply for a loan against securities now
Borrowing against securities: What do RBI rules say about shares?
Among the most common forms of LAS is a loan against shares. Here’s what RBI specifically outlines for such transactions:
- LTV limit: 50%
- Eligible shares: Only listed and actively traded equity shares
- Disbursal format: Often in overdraft format with interest charged only on the utilised amount
- Periodic review: Lenders must review the pledged stock’s value frequently
RBI also mandates that NBFCs should:
- Obtain credit reports before sanctioning large exposures
- Use automated platforms like NSDL/CDSL for share pledge and monitoring
- Inform borrowers about margin calls in case of sudden value dips
RBI regulations for loan against mutual funds
How to apply for Bajaj Finance loan against shares
Apart from shares, you can also raise funds against debt instruments and MFs. Here’s what RBI guidelines for loan against mutual funds generally cover:
Mutual funds:
- Debt mutual funds carry lower risk and often fetch a higher LTV (up to 90%)
- Equity mutual funds are subject to 50% LTV under loan against mutual funds
- NAV-based valuation must be followed as per RBI norms
Who is eligible to borrow under RBI norms?
As per loan eligibility securities RBI guidelines, the following borrowers qualify:
- Salaried individuals with verifiable income and demat holdings
- High-net-worth individuals (HNIs) with significant market exposure
- Corporates and trusts with investment-grade portfolios
- NRIs (in select cases), depending on lender and RBI approvals
Lenders will also assess:
- Age and repayment capacity
- End-use intent (not for speculative trading)
- Portfolio diversification to reduce concentration risk
Read more: As per loan eligibility RBI norms, the following borrowers qualify
Why not opt for unsecured loans?
Features & Benefits for Bajaj Finance loan against shares
Here’s the catch: unsecured loans may be quick, but they come at a price higher interest rates and rigid terms.
With LAS:
- You retain ownership of your assets
- Interest rates are significantly lower
- You only pay interest on the used amount (in overdraft models)
Comparing unsecured loans vs. LAS is like choosing between a high-interest personal loan and a flexible credit line backed by your own wealth.
Ready to borrow smart? Apply for a LAS today
What is Loan to Value (LTV) and why it matters?
LTV determines your maximum borrowing limit and is critical for your financial planning.
Let’s say you pledge shares worth Rs. 10 lakh:
- You can get up to Rs. 5 lakh (50% LTV) as a loan.
- If markets rise and the portfolio grows, you can request a top-up.
- If values dip, a margin call may require you to repay or add more collateral.
Understanding LTV helps you avoid unpleasant surprises. It also guides you in choosing which assets to pledge based on stability and risk appetite.
When should you consider a loan against securities?
Eligibility criteria for Bajaj Finance loan against shares
Here are a few real-world cases where LAS shines:
- Medical emergency: Need Rs. 3 lakh urgently? Pledge mutual funds and get instant liquidity.
- Business expansion: Raise Rs. 25 lakh against insurance policy without touching working capital.
- Child’s education: Instead of liquidating your long-term shares, use them to fund overseas tuition.
As long as you have an eligible portfolio, borrowing against securities as per RBI rules is one of the most strategic financial decisions you can make.
What happens during a margin call?
A margin call is a lender's request for additional collateral or partial repayment when the value of pledged securities falls below the required margin.
You typically have 7–10 working days to meet the margin shortfall. Failing to do so could result in the lender selling your pledged securities to recover dues.
RBI guidelines require lenders to:
- Provide written notice of margin shortfalls
- Offer a fair window to take corrective action
- Execute recovery without undue harassment
Staying aware of your collateral’s value and market trends can help you pre-empt margin calls.
Benefits of choosing a compliant LAS provider
Choosing a lender who follows RBI regulations loan against securities ensures:
- Fair and transparent valuation of assets
- No hidden charges or arbitrary foreclosure rules
- Prompt margin alerts and ethical recovery processes
- Compliance with SEBI and RBI standards
With Bajaj Finance, you get:
- Digital LAS journey with 24x7 access
- Loans starting from Rs. 10,000 up to Rs. 100 crore+
- Competitive interest rates and zero part-prepayment charges
How to apply for a loan against securities?
The process for applying for a loan against securities is simpler than you think:
Step-by-step:
- Check eligibility based on your portfolio and KYC
- Select securities you want to pledge
- Submit documents online or via a relationship manager
- Receive offer based on valuation and LTV
- Get funds disbursed to your account often in 24 hours
Want funds without selling your assets? Apply for a loan against securities in just a few clicks
Conclusion
Borrowing against securities is a powerful financial tool—when used wisely and within regulatory bounds. The RBI guidelines loan against securities are not just legal formalities; they’re frameworks to keep you protected, informed, and financially balanced.
So whether you are pledging shares, mutual funds, choose a compliant NBFC that puts transparency and efficiency first.
Pledge smart. Borrow responsibly. Apply now for a hassle-free Loan Against Securities
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Frequently asked questions
General
What are the rules for pledged shares in RBI?
The RBI mandates that Non-Banking Financial Companies (NBFCs) must maintain an LTV ratio of 50% for loans against pledged shares. Only highly liquid and low-risk Group 1 securities are accepted as collateral for larger loan amounts, ensuring market stability.
Is there a loan-to-value (LTV) ratio prescribed by the RBI for securities-backed loans?
Yes, the RBI mandates a maximum LTV ratio of 50% for loans against shares and mutual funds. For other eligible securities, the LTV may vary based on the security’s risk profile and lender’s internal policies.
Which types of securities are eligible as collateral under RBI norms?
RBI permits loans against dematerialised shares, mutual funds, government securities, and life insurance policies. These must be listed or approved by the lender and held in the borrower’s name.
What is the maximum amount I can borrow against securities as per RBI guidelines?
RBI does not cap the loan amount directly. However, the maximum loan depends on the type and value of the pledged securities, the applicable LTV ratio, and the lender’s internal credit assessment.
What are the statutory exposure limits by RBI for loans against securities?
RBI sets prudential exposure limits to ensure lenders do not take excessive risk. Limits apply to single borrowers, groups, and capital-market exposures. Lenders must maintain prescribed margins, follow LTV norms, and avoid excessive concentration in high-risk securities.
Can NBFCs offer loans against securities under RBI guidelines?
Yes. NBFCs can offer LAS as long as they comply with RBI’s Fair Practices Code, KYC/AML norms, board-approved lending policies, margin requirements, and restrictions on speculative usage. They must also maintain transparent disclosures and prudent risk-management practices.
What disclosures must lenders provide as per RBI?
Lenders must clearly disclose interest rates, annualised charges, margin requirements, rights on pledged securities, valuation practices, and consequences of non-payment. RBI requires transparent communication of all fees, terms, and borrower obligations before loan execution.
How often must valuation of securities be updated?
RBI mandates regular, market-linked revaluation. For LAS, lenders typically update valuations daily or as per internal policy to reflect market volatility. Frequent valuation ensures accurate margin monitoring and timely margin calls to protect both parties.
What are RBI’s rules on margin trading and speculative uses of LAS?
RBI disallows using LAS proceeds for speculative or margin-trading purposes. The loan must not be deployed for leveraged trades or buying additional market positions. Lenders must explicitly communicate this restriction and monitor end-use where applicable.
What penalties exist for non-compliance with RBI guidelines?
Non-compliance can lead to monetary penalties, supervisory restrictions, directives to strengthen processes, or limitations on lending activities. Severe or repeated violations may attract enforcement action, public censure, or governance-related interventions by RBI.
How does RBI define eligible securities and restrict penny stocks?
RBI requires lenders to accept only liquid, dematerialised, and regulator-recognised securities. Illiquid counters and penny stocks are discouraged or excluded due to volatility and valuation challenges. Lenders typically follow internal lists aligned with regulatory risk norms.
Which securities are eligible under RBI guidelines for loans against securities?
Eligible securities generally include listed equity shares, listed bonds, debentures, government securities, mutual fund units, and other market-linked instruments approved under lender policy. Securities must be demat-held, traceable, and capable of reliable valuation.
How does the RBI regulate margin calls on loans against securities?
RBI requires lenders to maintain prudent margins and initiate timely margin calls when collateral value drops. Borrowers may need to top-up securities or partially repay. Persistent shortfalls can lead to liquidation of pledged assets as per agreed terms.
What documents are needed for RBI-compliant loan against securities?
Typical requirements include KYC documents, PAN, address proof, demat details, security statements, pledge initiation forms, and loan agreements outlining rights and obligations. Lenders must also comply with KYC/AML checks and ensure accurate disclosure documentation.
What is the latest RBI circular on loan against shares?
The RBI has revised its lending norms for loans against shares, increasing the borrowing limit for individuals from Rs. 20 lakh to Rs. 1 crore across the banking system. It has also capped the loan-to-value (LTV) ratio for listed shares at 60%, subject to lenders’ risk policies and regulatory requirements.
Who is eligible for a loan against shares under RBI norms?
Individuals holding eligible listed shares or approved securities can apply for a loan against shares, subject to the lender’s credit assessment and documentation requirements. Borrowers must pledge securities in accordance with RBI guidelines, and lenders may evaluate factors such as portfolio quality, repayment capacity, and regulatory compliance before approval.
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