₹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 a loan against stocks?
A loan against stocks is a secured loan where investors pledge their shares as collateral to access funds. This means you can get a loan while still retaining ownership of your investments.
The lender holds the pledged shares until the loan is repaid, but you continue to benefit from dividends and market growth. It is an efficient way to meet liquidity needs without selling your assets.
Types of stocks approved for loan
Different types of stocks qualify for a loan against shares. Here is how lenders generally categorise them:
| Type of Stocks/Assets | Description | Details |
| Blue-chip stocks | Blue-chip stocks are shares of large, well-established companies with a history of stable earnings and strong financials. | Lenders often prefer blue-chip stocks as collateral due to their stability and liquidity in the market. These stocks are less volatile and are considered safer bets for lenders. |
| Mid-cap stocks | Mid-cap stocks are shares of companies with a market capitalisation between that of large-cap and small-cap companies. | While mid-cap stocks are more volatile than blue-chip stocks, they can still be approved for loans against shares. Lenders may require a higher margin or interest rate for such stocks. |
| Large-cap stocks | Large-cap stocks are shares of companies with a market capitalisation typically exceeding Rs. 20,000 crore | Large-cap stocks are considered relatively safe investments, making them suitable for loans against shares. Lenders may offer favorable terms for loans backed by large-cap stocks. |
| Exchange Traded Funds (ETFs) | ETFs are investment funds that are traded on stock exchanges, similar to stocks. | Some lenders may accept ETFs as collateral for loans against shares. ETFs offer diversification benefits, making them attractive to lenders. |
| Mutual fund units | Mutual fund units represent ownership in a mutual fund, which pools money from investors to invest in stocks, bonds, or other securities. | Some lenders may accept mutual fund units as collateral for loans against shares. However, the loan amount may be limited to a certain percentage of the mutual fund's net asset value. |
How do loans against stocks work?
How to Secure a Rs. 2 Crore Loan Against Securities Instantly
Here is a simple look at how the process unfolds:
- Pledge your stocks: The borrower pledges eligible shares as collateral.
- Loan amount: The lender evaluates the stock value and offers a percentage-based loan (usually 50–70% of current value).
- Agreement: Terms such as interest rate, tenure, and repayment method are finalised.
- Fund disbursement: The approved amount is credited to your account, often within 24–48 hours.
- Ownership retained: Even though shares are pledged, the borrower remains the owner and continues to receive dividends.
- Interest payments: Interest is paid periodically as per the agreement.
- Margin requirements: Borrowers must maintain a minimum margin as set by the lender.
- Margin calls: If stock value falls below the margin, additional security or repayment may be required.
- Repayment: The borrower repays as per the schedule.
- Release of shares: Once repayment is complete, the pledged stocks are released back.
Benefits of loan against stocks
How to apply for Bajaj Finance loan against shares
A loan against shares can offer several distinct advantages:
- Liquidity: Investors can access funds without selling their stocks, allowing them to meet their short-term liquidity needs.
- Retain ownership: Investors retain ownership of their stocks, which means they can benefit from any future appreciation in stock prices.
- Lower interest rates: Loan against shares typically offers lower interest rates compared to unsecured loans, as the stocks serve as collateral.
Things to consider before availing loan against stocks
Features & Benefits for Bajaj Finance loan against shares
While loans against shares are convenient, it is important to weigh a few key factors before applying:
- Loan amount: Consider the amount you need and ensure it aligns with the value of the stocks you plan to pledge. Lenders typically offer a loan amount based on a percentage of the stock's current market value.
- Interest rates: Compare interest rates offered by different lenders. Lower interest rates can help reduce the cost of the loan.
- Loan-to-Value (LTV) ratio: Understand the LTV ratio offered by the lender, which determines the maximum loan amount you can avail of based on the value of the pledged stocks. A higher LTV ratio can help you access more funds but may increase the risk of margin calls.
- Margin calls: Be aware of the possibility of margin calls if the value of the pledged stocks falls below a certain level. Ensure you have a plan in place to meet margin requirements to avoid potential consequences.
- Repayment terms: Review the repayment terms, including the tenure and schedule of repayments. Ensure you can comfortably manage the repayment schedule along with your other financial obligations.
- Impact on stock portfolio: Consider the impact of pledging stocks on your overall stock portfolio. Pledging too many stocks may limit your ability to make changes to your portfolio or take advantage of market opportunities.
- Risk assessment: Assess the risks associated with a loan against stocks, including the potential loss of pledged stocks if you are unable to repay the loan. Consider alternative financing options if the risks outweigh the benefits.
- Tax implications: Understand the tax implications of availing a loan against stocks. Interest paid on the loan may be tax-deductible, but the sale of pledged stocks may incur capital gains tax.
- Alternative financing options: Explore alternative financing options, such as personal loans or lines of credit, to compare terms and choose the best option for your financial needs.
- Financial advisor consultation: Consider consulting with a financial advisor to assess your financial situation and determine if availing a loan against stocks is the right choice for you. A financial advisor can help you weigh the pros and cons and make an informed decision based on your circumstances.
Why a loan against shares is a smart financial move?
Eligibility criteria for Bajaj Finance loan against shares
For many investors, this loan type bridges the gap between opportunity and liquidity. It allows you to seize investment or personal opportunities without disturbing your core holdings. Whether it is expanding a business, handling a medical expense, or managing short-term cash flow, a loan against shares can help you stay financially agile.
Conclusion
A loan against shares is one of the simplest ways to unlock liquidity without compromising long-term investments. It lets you raise funds swiftly while keeping ownership intact. However, like all financial products, it’s essential to understand the terms, risks, and repayment conditions before applying. When used wisely, it can become a smart financial tool that balances liquidity with continued wealth growth.
Stay invested and stay liquid. Apply for a loan against shares can power your financial goals today.
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Frequently Asked Questions
General
Is it good to take a loan against stocks?
Taking a loan against stocks can be a viable option for individuals who need funds but want to retain ownership of their stocks. It allows them to unlock the value of their investments without selling them. However, it's important to carefully consider the risks, such as margin calls and potential loss of collateral, before opting for this type of loan.
What is the interest rate on loans against stocks?
The interest rate on a loan against stocks can vary depending on factors such as the lender, the loan amount, the loan-to-value ratio, and the borrower's creditworthiness. Generally, interest rates for loans against stocks are lower than unsecured loans, ranging from around 9% to 15% per annum.
How to get a loan against stocks from Bajaj Finance?
You can apply online for a loan against stocks from Bajaj Finance in three simple stages: apply, pledge, and receive funds.
- Enter your mobile number and verify it using OTP.
- Provide your PAN, date of birth, and email details.
- Select eligible shares and enter the required quantity.
- Complete KYC and verify your bank account details.
- Accept the agreement and pledge your shares.
- Receive the approved amount within 24–48 hours after verification.
Enter your mobile number to check your pre-approved offer.
What is the LTV ratio for a loan against shares?
The LTV ratio for a loan against shares generally ranges from 50% to 70%, meaning you may borrow Rs. 50,000–Rs. 70,000 against eligible shares worth Rs. 1 lakh. The exact LTV depends on the lender, the shares pledged, their market value, and applicable lending terms. A higher LTV provides greater borrowing capacity but may increase exposure to market-related margin requirements.
What happens if stock prices fall after I pledge them?
If the value of your pledged shares falls significantly, a margin call may be triggered, requiring you to restore the required LTV ratio. For example, a 20–30% fall in share prices may reduce the collateral value enough for the lender to ask you to pledge additional shares or repay part of the outstanding amount. If you do not meet the margin requirement within the specified period, the lender may sell the pledged shares to recover the dues.
Can I sell my pledged shares before repaying the loan?
No, pledged shares cannot be sold until the lien is released after full repayment or closure of the outstanding loan. Since the shares serve as collateral, they remain under the lender’s lien during the loan period. After you repay the dues and complete the required closure process, Bajaj Finance can initiate the release of the pledge, subject to applicable terms and verification.
What is the difference between a loan against stocks and a margin trading facility?
The key difference is purpose: a loan against shares provides cash liquidity against pledged stocks, while a margin trading facility provides leverage to buy additional stocks. First, a loan against shares allows you to use borrowed funds for eligible financial needs without selling your holdings. Second, margin trading uses borrowed funds specifically for market transactions and exposes you to trading-related gains and losses. A loan against securities may also accept assets such as mutual funds, bonds, or insurance policies, depending on the lender.
Disclaimer
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