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

Understand when taking a loan against securities in a rising market is helpful and when it may be risky.
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3 mins
09-February-2026

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 should you go for loan against securities in a rising market?

A rising market increases portfolio value, making loans against securities a smarter way to raise funds without selling.

  • Higher loan eligibility as portfolio value rises, without liquidating your investments.
  • Stay invested and capture future gains instead of exiting during a bullish phase.
  • Lower interest rates compared to unsecured loans due to asset-backed security.
  • Pay interest only on utilised amount, even if a higher limit is sanctioned.
  • Quick liquidity to seize time-sensitive personal or business opportunities.
  • Flexible repayment options that align with improving cash flows.

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.

Know more about benefits of a loan against securities

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

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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.

Does rising market make loans against securities safer?

Yes, a rising market usually increases the value of pledged securities, reducing the risk of margin calls. However, markets remain volatile, so lenders still maintain a buffer with loan-to-value (LTV) limits.

How is loan amount calculated during a rising market?

The loan amount depends on the current market value of securities multiplied by the lender’s approved LTV ratio. In a rising market, higher valuations may enhance eligibility, but sanction still depends on policies and borrower profile.

Is it better to sell securities or take LAS when markets are rising?

Selling during a rising market may give immediate profits, but you lose future growth potential. Taking LAS lets you unlock liquidity while keeping ownership intact, making it preferable if you expect continued market appreciation.

Which securities are safest to pledge during a rising market?

Blue-chip shares, government bonds, and diversified mutual funds are considered safer for pledging. They are less volatile compared to small-cap or speculative stocks, making them better collateral choices even in bullish conditions.

How quickly can I get funds with LAS in a bullish run?

Funds from LAS can be disbursed within 24–48 hours once securities are verified and pledged. In bullish markets, lenders may process quickly since collateral value is strong, but approvals still depend on KYC and credit checks.

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