₹25,000 - ₹25 Cr
Loan of up to 80% of policy value| Funding against policies under lock-in period
Overview
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What is security?
A security is a financial asset that can be traded or pledged. It represents a claim, ownership, or creditor relationship.
Here are the main characteristics of securities:
- Tradable: Securities can be bought, sold, or exchanged in financial markets.
- Value-driven: Their prices are influenced by market demand and supply.
- Issued by entities: Governments, corporations, or institutions issue securities.
- Used for fundraising or investing: Companies use securities to raise capital, while individuals invest in them for returns.
Securities are broadly categorised into debt, equity, derivatives, hybrid, and alternative instruments. Let's explore each.
Debt securities in India
Government securities
Issued by the Reserve Bank of India on behalf of the Government of India, these are among the safest investment options.
- Examples include Treasury Bills (T-bills), Government of India Bonds, and State Development Loans.
- They pay interest at fixed or floating rates.
- Investors include individuals, banks, and institutions.
| Type | Maturity | Interest Type | Who Buys Them? |
| Treasury Bills | Up to 364 days | Zero-coupon | Retail investors, banks |
| Government Bonds | 5-40 years | Fixed/floating | Institutions, HNIs, public |
| SDLs (State Loans) | 10-30 years | Fixed | Investors seeking steady returns |
Corporate bonds and debentures
These are issued by companies to raise capital. They generally offer higher returns than government securities but come with higher risk.
- Corporate bonds are structured debt with interest payouts.
- Debentures are unsecured but may offer attractive interest.
- Ratings (AAA to junk) indicate creditworthiness.
- Ideal for medium to long-term investors.
Money market instruments (T-bills, CMBs, CDs)
These are short-term debt instruments with high liquidity.
- T-bills: Issued by the government; zero-coupon and short maturity.
- Cash Management Bills (CMBs): Like T-bills but for ultra-short terms.
- Certificates of Deposit (CDs): Issued by banks; offer fixed interest.
| Instrument | Maturity | Issuer | Risk Level | Return Type |
| T-bills | < 1 year | Government | Very Low | No interest, discounted price |
| CMBs | < 91 days | Government | Very Low | Short-term yield |
| CDs | 7 days-1 year | Banks | Low | Fixed interest |
Equity securities in India
How to Secure a Rs. 2 Crore Loan Against Securities Instantly
Equity securities represent ownership in a company. Investors buy shares hoping the company performs well so their share value increases.
Main features:
- Ownership: You become a part-owner.
- Returns: Earn via dividends and capital gains.
- Riskier: Market performance directly affects value.
They can be traded in stock markets and are ideal for long-term wealth creation.
Common vs preferred shares
Common shares:
- Voting rights
- Variable dividends
- Higher growth potential
Preferred shares:
- No/limited voting rights
- Fixed dividends
- Priority over common shares in payouts
Looking to unlock liquidity without selling your shares? You can avail of a loan against shares at competitive rates. Click to know more.
Derivative securities
Derivatives derive their value from an underlying asset like a stock, bond, index, or commodity.
They are commonly used for hedging or speculation.
Common examples include:
- Futures contracts: Agreement to buy/sell at a future date at a fixed price.
- Options: Right (not obligation) to buy/sell an asset.
- Swaps: Exchange of cash flows (like interest rate swaps).
Futures, options, swap contracts
- Futures: Used by traders to hedge or speculate. E.g.: Farmer locks the price of wheat for delivery.
- Options: Buy a right to purchase shares at a specific price. E.g.: Investor expects price to rise.
- Swaps: Companies exchange fixed for floating interest payments. E.g., Corporate hedges loan interest.
Hybrid securities
How to apply for Bajaj Finance loan against shares
Hybrid securities combine features of debt and equity. They offer regular income like bonds but may also convert into shares.
Useful for investors seeking a balance of safety and growth.
Convertibles, structured products
- Convertible debentures: Start as debt, convert to equity.
- Preference shares: Fixed dividends, sometimes convertible.
- Structured products: Customised investment options linked to market indices, interest rates, or a mix.
Alternative and social instruments
These are less traditional, often used for diversification or global exposure.
They include:
- Instruments listed overseas or tracking foreign assets.
- Socially impactful investments.
ADRs/GDRs, IDRs, participatory notes
Features & Benefits for Bajaj Finance loan against shares
- ADRs/GDRs: Indian companies list abroad to raise capital.
- IDRs: Foreign companies listed on Indian exchanges.
- P-notes: Offshore investments in Indian markets by foreign investors.
These help global investors participate in Indian growth without direct registration.
Sovereign Gold Bonds, Gold ETFs, Commodity ETFs
Gold-linked investments are gaining popularity.
| Instrument | Backed by | Return type | Liquidity |
| Sovereign Gold Bonds | Government | Interest + gold price | Tradable on exchanges |
| Gold ETFs | Physical Gold | Market-linked | Highly liquid |
| Commodity ETFs | Commodities | Market-linked | Moderate |
Need funds against your Sovereign Gold Bonds? You do not need to sell them. Explore loan options here
Distressed securities and special cases
Eligibility criteria for Bajaj Finance loan against shares
These include:
- Bonds of companies nearing default or bankruptcy.
- Reconstructed debt traded at deep discounts.
- Ideal for high-risk investors seeking turnaround opportunities.
They require careful analysis and are not suited for beginners.
ESG and Green bonds / Sustainable debt
These are issued to fund environmentally or socially responsible projects.
Examples include:
- Renewable energy bonds
- Social welfare and affordable housing bonds
- Green infrastructure debt
Investing in these aligns your money with positive impact goals while still earning returns.
How to invest - channels and platforms?
Investing in Indian securities is easier than ever. Here is a step-by-step checklist to get started:
Steps to invest:
- Open a Demat and trading account with a SEBI-registered broker
- Complete KYC (PAN, Aadhaar, bank details)
- Choose your investment product (stocks, bonds, mutual funds, etc.)
- Use online platforms or apps to place orders
- Track performance regularly
Checklist:
- Valid PAN and Aadhaar card
- Registered mobile number and email ID
- Linked bank account
- Understanding of your risk appetite
- Select reliable and regulated platforms
Regulatory framework and SEBI guidelines
The Indian securities market is governed by SEBI (Securities and Exchange Board of India), which protects investor interest and ensures fair practices.
Key points:
- SEBI regulates stock exchanges, brokers, mutual funds, and listed companies
- It ensures transparency and fair pricing in markets
- Sets guidelines for issuing and trading securities
- Oversees investor grievance redressal
- Regulates loans against securities and margin trading practices
What are financial securities and how do they work?
Financial securities are standardised tradable instruments that represent a financial claim—of ownership, debt or a derivative—and are regulated by SEBI in India.
- Issued: Companies and governments issue securities to raise capital or borrow funds.
- Traded: Securities in India are bought and sold through recognised stock exchanges or other authorised platforms.
- Valued: Their prices may change based on market demand, company performance, interest rates and economic conditions.
- Used: Eligible financial securities can be pledged for a Loan Against Securities with Bajaj Finance without selling the underlying investments.
Ananya’s scenario
Ananya, a 35-year-old software engineer in Bengaluru, holds ₹20 lakh in equity shares and mutual fund units. Instead of selling her investments to meet a ₹10 lakh emergency, she pledged eligible securities with Bajaj Finance and accessed a Loan Against Securities, while retaining ownership of her portfolio.
To understand what are the different types of securities in India, explore the classification of equity, debt and derivative securities.
Conclusion
India offers a rich landscape of securities from government bonds and equity shares to gold ETFs and green bonds. Each type serves a unique purpose and carries its own risk-return profile. Understanding the types of securities in India helps you pick the right options for your financial goals, whether you are investing for growth, earning passive income, or seeking urgent liquidity.
Need liquidity without selling your investments? You can easily avail a loan against mutual funds, shares, or bonds. Apply now
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Frequently Asked Questions?
General
What are the main types of securities in India?
India has five main types of securities: debt securities (like bonds), equity shares, derivatives (like futures and options), hybrid securities (like convertible debentures), and alternative instruments (like Sovereign Gold Bonds, ETFs, ADRs/GDRs). Each serves different investment or borrowing purposes.
How do government and corporate bonds differ?
Government bonds are issued by the RBI on behalf of the government and are considered low-risk. Corporate bonds are issued by private or public companies, offering higher returns but with added credit risk. Both pay regular interest but differ in issuer credibility and yield potential.
What are the benefits of hybrid securities?
Hybrid securities combine features of debt and equity, offering steady income along with potential for capital appreciation. They may provide fixed returns initially and later convert into equity shares, giving investors the benefits of both safety and growth. Ideal for moderate-risk investors.
How do ADRs/GDRs let you invest in foreign companies from India?
American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) allow Indian companies to raise capital abroad. Similarly, Indian investors can access global markets by investing in ADRs/GDRs of foreign companies, enabling portfolio diversification without opening overseas accounts.
What are Sovereign Gold Bonds and Gold ETFs?
Sovereign Gold Bonds (SGBs) are issued by the government and offer interest plus gold price gains. Gold ETFs are traded funds backed by physical gold. Both help investors invest in gold digitally without storage worries, but SGBs offer tax and interest benefits too.
Can I get a loan against securities in India?
Yes—eligible securities, including shares, mutual funds, bonds and SGBs, can be pledged for a Loan Against Securities in India with Bajaj Finance. Enter your OTP to check your pre-approved LAS offer with Bajaj Finance.
Which types of securities are eligible for a loan against securities with Bajaj Finance?
Bajaj Finance may accept eligible shares, mutual funds and ETFs, as well as government bonds and SGBs, subject to its approved list. Loan amounts may range from 50–80% of the pledged value, after applicable haircuts.
What are the risks of investing in derivative securities?
Derivatives carry high leverage risk, and losses may exceed the initial investment. Futures may require only 5–20% margin, amplifying gains and losses; these complex instruments are regulated by SEBI and traded on NSE/BSE.
Disclaimer
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