Know your Loan Against Securities features and benefits

You can pledge your shares, mutual funds, or bonds as collateral to get a loan against securities. With a loan against securities, you can get the loan amount depending on the market value of your pledged securities.

When you borrow a loan against securities, a drawing power is assigned to you, and you can avail of the loan amount within this limit. This drawing power varies from 50% to 90% of the sanctioned loan amount.

Since your loan against securities drawing power depends on the market value of your pledged securities, the same is subject to change. In the event of any such change in the drawing power, you’ll receive an SMS on your registered mobile number.

How do loans against securities work?

Loans against securities (LAS) enable borrowers to leverage their existing investments, such as stocks, bonds, or mutual funds, as collateral to obtain a loan. This type of loan allows individuals to access liquidity without selling their assets. The amount of the loan depends on the value and type of securities offered as collateral, typically ranging from 50% to 85% of the asset’s current market value.

Once approved, the lender holds the securities in a demat or escrow account until the loan is repaid. Interest is charged only on the utilised loan amount, making it a flexible financial tool. Repayments are generally structured as either equated monthly instalments (EMIs) or interest-only payments with a bullet payment for the principal at the end of the term.

LAS provides several advantages, such as no need for credit scores or income proof, quick processing, and continued ownership of the pledged securities. However, borrowers must be cautious about market volatility. If the value of the pledged securities drops significantly, lenders may issue a margin call, requiring the borrower to deposit additional assets or repay part of the loan to cover the deficit, potentially leading to forced liquidation of the securities.

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  Get the most out of your loan against securities

  • Pay only interest as your monthly instalment and pay the principal later.
  • Withdraw funds from your drawing power anytime you need.
  • Pay interest only on the amount you withdraw and not the entire loan limit.

  Features of Loan Against Securities

  A Loan Against Securities (LAS) offers a range of features that provide flexibility and ease of access to funds. Borrowers can pledge their investments, such as stocks, bonds, or mutual funds, as collateral without selling them. The loan amount is determined based on the market value of the pledged securities, typically ranging from 50% to 85%.

  One key feature is the interest charged only on the amount utilised, allowing borrowers to manage costs effectively. The loan tenure can be flexible, with the option of making either equated monthly instalments (EMIs) or interest-only payments, with the principal paid at the end. Quick processing and minimal paperwork are added benefits, making it accessible without extensive credit checks.

  Borrowers also retain ownership of their securities, meaning they can continue earning dividends or interest. However, market fluctuations could trigger a margin call, requiring additional collateral or partial loan repayment.    

  Manage your loan against securities features

When you borrow a loan against securities, you get additional benefits like paying interest only EMIs, withdrawing funds from your available limit and more. You can explore these features by visiting our customer portal – My Account.