Turn Your Investments into Instant Financial Support

What Is a Loan Against Securities?

A secured loan, also known as a loan against securities, is a type of loan that allows you to borrow funds, by pledging the investments that you already have, such as shares, mutual funds, bonds, ETF, or insurance policy without selling them. You remain engaged and at the same time receive fast liquidity with a reduced rate of interest over a personal loan.

Your securities are held by the lender as collateral and he provides you with a credit limit depending on the value of his securities. The money can be used in business aspects, in case of emergencies, in education or in any emergency financial needs. As you are paying interest on what you utilize, it will be a convenient and cost-efficient method of accessing money without interfering with your portfolio.

Key Highlights of Loan Against Securities (LAS)

You can get instant access to liquidity by pledging any of a broad selection of approved financial assets, with no need to sell your investments to obtain loans against securities (Loan Bazaar) or to forfeit potential future gains.

• Liquidity Without Selling Investments: Tap money without selling your shares, mutual funds or bonds and keep your portfolio growing.
• Lower Interest Rates: Since it is a secured loan, LAS will tend to have low interest rates in comparison with personal or unsecured borrowing.

  

• Fast Fund Availability: LAS is fast to use when one is in urgent need of financial aid because it takes shorter periods to approve and disbursed.
• Flexible Fund Usage: The loan may be used in various ways such as in education, travel, emergency or in buying assets.
• Overdraft Facility: Overdraft-Many LAS facilities operate similarly to an overdraft0 you therefore only pay interest on the overdraft amount you make.
• Retain Ownership Advantages: You will still receive dividends, bonuses and the right to vote on your pledged securities.
• Interest Charged on Usage: Only the amount you utilize in the loan is charged the interest thus assisting in optimizing the cost of borrowing.

What type of Securities may I pledge?

You can get instant access to liquidity by pledging any of a broad selection of approved financial assets, with no need to sell your investments to obtain loans against securities (Loan Bazaar) or to forfeit potential future gains.

• Equity Shares (Stocks): Equity shares are listed shares in your demat account which are one of the most accepted securities. They are very liquid and they enable you to get funds and still enjoy the prospective market value.
• Mutual Funds: It is possible to pledge both equity and debt mutual fund units. The amount of eligible loan is generally determined by the type of fund, quality of the portfolio and the value of the units in the market.
• Bonds and Debentures:Many lenders accept corporate bonds, government bonds and debentures that have regular returns and are very advantageous due to their relative stability.
• Exchange Traded Funds (ETFs): ETFs are a combination of both stocks and mutual funds where the exchange is highly diversified and liquid which makes them an ideal choice when borrowing against securities.
• Other Approved Securities: Depending on the policies of the lenders, other instruments like fixed-income securities, some insurance policies, and government guaranteed savings instruments can also be considered.

Eligibility of Loan against Securities (LAS).

Stipulations on eligibility of a loan against securities (LAS) is supposed to be simple since the loan will be secured by financial securities which are regulated. In Loan Bazaar, lenders are rather sensitive to the quality, ownership and liquidity of pledged securities, and do not use only income or credit score parameters. This renders LAS a flexible source of funds to investors, who do not want to dispose their portfolios.

Eligibility Requirements of Applicants.

• Residential Status: Indian Resident persons are eligible to apply. The NRIs are also granted access to LAS facilities by selected lenders under the necessary RBI guidelines.
• Age Need: The applicants are normally admitted between 21 to 90 years old and the maximum age at the maturity of the loan is between 70 and 80 years.
• Employment & Business Profile: Salaried professionals, self-employed people, business owners, partnership firms, private limited companies, and HUFs are eligible to take a loan against securities.
• Banking & Demat Account: An effective savings or current bank account is obligatory. In the case of shares, ETFs, and dematerialised mutual funds, an active Demat account of the name of the applicant is mandatory.
• Credit Profile: In the case of LAS, credit score requirements are mostly flexible since this is a secured loan. A good credit history can probably aid in obtaining more favorable loan against securities interest rates, but it is not the only factor of approval.

Qualification of Securities Hyped as Security.

• Approved Securities Only: Lenders take under bid list approved securities. These normally consist of equity shares, mutual funds, ETFs, government bonds and other instruments controlled by SEBI.
• To have clear ownership: Applicant must have no prior current lien/pledge to the securities. When there are joint holdings, all the persons must be co-applicants.
• Minimum Portfolio Value: Most lenders have minimum portfolio value to open a LAS application, which may be as little as 50 000 or more, depending on the nature of the asset.
• Loan-to-Value (LTV) Ratio: It is an approved amount of loan as a part of the market value of the pledged securities. The LTV limits that are generally available to the equity instruments are lower, whereas debt mutual funds and bonds can have higher LTVs, as per the RBI norms and internal risk policies.

Loan Bazaar Guide Loan Against Securities (LAS) Process Step-by-Step Guide.

Loan Against Securities (LAS) is an opportunity to borrow money through pledging your shares (or mutual funds and
other financial assets), without selling them. This is a quick, digital process regulated by the RBI and SEBI;
hence, a suitable method for raising short- to medium-term liquidity.

Here’s a simple, step-by-step guide to how the Loan Against Securities process works when you apply through Loan
Bazaar.

• 
  Step 1: Select the appropriate LAS Lender.
  Start by comparing banks and Non-bank financial institutions providing loans against Securities. Some important factors to consider are interest rates, the Loan-to-Value ratio, processing fees, and whether the loan is issued as an overdraft or a term facility. Loan Bazaar helps you compare lenders simultaneously, enabling you to select an affordable, flexible, and fast option.
  

• 
  Step 2: Eligibility of Securities Check.
  Not every investment can be listed as LAS. Listed equity shares, mutual funds, ETF, and some type of debt instruments deposited in a demat account are accepted by most lenders. The securities should be listed on the lenders’ approved list and be liquid as specified by SEBI.
  Simple KYC is required of every applicant. Loan Against Securities Eligibility
  

• 
  Step 3:
  Submit the Loan against Securities Application.
  When you have been found eligible, submit your LAS application online. The majority of lenders offer an entirely digital process on their websites or mobile apps, reducing paperwork and approval cycles. Loan Bazaar will ensure your application is forwarded to the lenders most suitable for your security profile.
  

• 
  Step 4:
  Upload KYC and Necessary Documents.
  You will be required to give PAN, Aadhaar, address proof and bank account details. Since LAS is a secured loan, income documentation is usually not obligatory hence making the process of approval easy as opposed to unsecured loans. This measure is to guarantee compliance with the KYC requirements of RBI.
  
  

• 
  Step 5:
  Digitally Pledging Securities
  Your demat pledging of securities will be done digitally via NSDL or CDSL authentication using an OTP. The securities continue to belong to you, although the lender puts a lien on the loan repayment. No paperwork or handover. How pledging in LAS works
  

• 
  Step 6: Checking and Loan approval
  The lender will review your documents and determine the market value of the pledged securities. The final loan amount is approved depending on the relevant Loan-to-Value ratio. In the case of equity shares, the LTV percentage is usually limited to 50 percent, and higher limits can be applied to debt mutual funds.
  

• 
  Step 7:
  Disbursal of Loan and Fund Usage
  After approval, the loan is credited to your bank account, taking the form of an overdraft facility. You were only charged interest on what you use, and not the approved limit. The money may be used for business requirements, investments, or short-term liquidity needs, depending on the lender’s requirements.