Should you take a Loan Against Securities during a rising market?

Know more about why the best time to avail loan against securities is during a bull market.
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3 mins
31-May-2025

You might be sitting on an opportunity and not just in the stock market. If your portfolio is thriving in a bullish market, a loan against securities could be your smartest financial move yet. Instead of selling your investments and losing out on future market gains, you can leverage them for quick liquidity while still enjoying the benefits of long-term capital appreciation. It’s a win-win and especially powerful when markets are on an upswing.

What is a loan against securities, and how does it work?

A loan against securities (LAS) allows you to borrow money by pledging your existing financial assets like equity shares, mutual funds, bonds, or ETFs as collateral. In simple terms, your investments become a ticket to liquidity. Rather than liquidating assets to cover immediate needs like medical expenses, business cash flow, or overseas education, you retain ownership while accessing funds.

Here’s how it typically works:

  • You pledge eligible securities with a lender.
  • Based on the current market value, the lender offers a loan usually up to 50–90% of the pledged value.
  • The funds are disbursed into your account.
  • Meanwhile, your investments stay in your name and continue to grow in value.

Did you know? Depending on your asset type and value, you could access a loan of several lakhs or even crores within 24–48 hours*.

Need funds urgently? Check your eligibility and borrow without selling your investments. Apply now

Why consider a loan against securities in a rising stock market?

If the market is on a bullish run, chances are your investment portfolio is looking healthier than ever. And that translates into one key benefit: higher loan eligibility. Higher loan amounts with a growing portfolio: When stock prices go up, so does the market value of your securities. Since lenders calculate the loan amount as a percentage of this value, a bullish market can significantly boost your borrowing limit.

Imagine this: Your mutual fund portfolio grows by 25% in six months. Without doing anything extra, you now qualify for a proportionately higher loan without selling even a single unit.

Lower interest rates: In a rising market, lenders face less risk. Your strong portfolio gives them confidence, which can result in more attractive interest rates compared to unsecured loans.

Why borrow at 18–24% on an unsecured loan when you can access funds through your investments at nearly half the cost? Apply for loan against securities

A LAS is not just affordable it’s also a smarter choice if you are mindful of preserving long-term wealth.

Planning liquidity smartly: Not just for emergencies

Yes, a loan against shares and securities is a dependable option when you're dealing with urgent financial needs. But it’s not limited to emergencies.

Strategic borrowers often use LAS to:

  • Fund their child’s international education
  • Secure money for a dream home down payment
  • Finance a short-term business expansion
  • Build working capital during seasonal spikes
Loan Against Shares
Loan Against Mutual Funds

Key things to consider before pledging your securities

While the process of availing a loan against securities is smooth and paper-light, it’s important to know the fine print before you proceed.

  • Market volatility: Securities can go up, but they can also go down. If the market dips, so will the value of your pledged assets. This could trigger a margin call, where the lender may ask you to either top-up the collateral or repay part of the loan.
  • LTV (Loan-to-Value) ratio: Typically, lenders cap LAS at 50–90% of the market value of the pledged securities. This protects them against sudden value drops but also limits how much you can borrow. Always calculate your real borrowing power before planning.
  • Repayment discipline: It’s easy to get LAS funds quickly, but repayment is still your responsibility. Delayed EMIs or missed payments may result in lenders selling your pledged securities to recover dues.

How to apply for a loan against securities?

Applying for a loan against securities (LAS) is simpler and faster than most people think. Whether you’re looking for urgent liquidity or planning a large financial goal, this form of secured lending can be initiated with just a few easy steps. Here's a quick step-by-step breakdown of how to get started:

  1. Check your eligibility
    Start by confirming that you hold eligible securities. These typically include listed equity shares, mutual funds, bonds, government securities, ETFs, or insurance policies, depending on the lender’s criteria. The more diverse and valuable your portfolio, the higher your loan eligibility may be.
  2. Choose a trusted lender
    Do some quick research to compare lenders. Look at key factors such as interest rates, loan-to-value (LTV) ratios, approved securities list, service charges, and the ease of application. Some lenders offer online processes, while others may require you to visit a branch.
  3. Submit your documents
    You'll need to provide standard KYC documents such as identity proof, address proof, PAN card, and bank account details. You’ll also be asked to submit your demat holdings or mutual fund statement, depending on what you plan to pledge.
  4. Pledge your securities
    Once documentation is verified, the lender will initiate a lien marking or pledge on your securities. This means you retain ownership, but the lender has rights over the assets until the loan is repaid.
  5. Get your funds disbursed
    After approval, the loan amount is transferred directly to your bank account often within 24 to 48 working hours. The speed of disbursal makes LAS a reliable option for urgent needs.

Tip: For large portfolios, some lenders offer high-value LAS solutions with ticket sizes running into multiple crores, and an extended list of approved securities.

Looking to access liquidity? Apply now and get funded fast

Pros and cons of LAS in a bullish market

Borrowing against securities can be a smart and cost-effective way to raise funds, especially during a rising market. But like any financial tool, it comes with its own set of advantages and considerations. Here's a closer look:

Pros

  • Quick access to liquidity: You can borrow without liquidating your investments, making it ideal for short-term cash flow needs or urgent expenses.
  • Lower interest rates: Since the loan is secured by your investments, lenders typically offer better rates than unsecured loans or credit cards.
  • Versatile end-use: Whether it's business expansion, international travel, medical emergencies, or funding your child’s education, LAS gives you full flexibility.
  • Your portfolio keeps growing: You continue to benefit from market appreciation, dividends, and NAV growth while still accessing liquidity.

Scenario: Imagine your mutual funds are up 30% in a strong market. Instead of redeeming them and paying capital gains tax, you could borrow against them keeping the growth intact while funding your goals.

Cons:

  • Market volatility: If your pledged securities drop in value, you may face a margin call requiring additional collateral or partial repayment.
  • Asset liquidation risk: Missing EMIs or breaching LTV thresholds could result in the lender selling your pledged investments to recover the loan.
  • Requires regular monitoring: You will need to keep an eye on your pledged assets and market conditions to avoid sudden repayment pressure.

Conclusion

If your investment portfolio is in good health and you’re witnessing upward trends in the market, this could be a smart time to consider a loan against securities. Whether your need is planned or sudden, borrowing against a rising portfolio allows you to access more funds, potentially at lower interest rates while staying fully invested. This strategy not only preserves your long-term financial goals but also enhances the overall efficiency of your money.

Ready to turn your portfolio into a powerful liquidity engine? Start exploring your options today. Apply now

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

Is a loan against securities safe during a rising market?

Yes, borrowing against securities during a rising market is generally safer, as increasing asset values enhance loan eligibility. However, borrowers should be mindful of potential market volatility and margin calls.

With a rising market, you can unlock liquidity while your investments work for you. Stay ahead, maximise your gains, and seize financial opportunities with confidence.

Leverage your securities for a loan with confidence! Apply now

What types of securities are eligible?

Eligible securities typically include stocks, mutual funds, bonds, and government securities. The lender determines the acceptability of specific assets based on factors like liquidity, stability, and risk profile.

What happens if the market falls suddenly?

If the market drops, the value of pledged securities decreases, which may lead to a margin call. Borrowers might need to pledge additional securities or repay a portion of the loan.

How much can I borrow against my securities?

The loan amount depends on the lender’s loan-to-value (LTV) ratio, which typically ranges from 50% of the market value of eligible securities.

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