Loan Against Securities

Most individuals prefer selling their assets and securities to adjust funds during a financial crunch. While it may bring relief momentarily, it will lead to potential losses in the long run. 

Instead, opt for a loan against shares and securities as they not only help resolve the current financial crisis but also provide several other benefits. 

What Is Loan Against Securities?

Customers can borrow money against the securities they own without selling them through loans secured by those securities. This is called Loan Against Securities(LAS).

When customers pledge their securities, they receive an overdraft facility. The overdraft limit is determined based on the value of the securities pledged.

How Does Loan Against Securities Work?

Loans against securities are loans extended by banks and NBFCs. A loan against securities is a secured loan, wherein the securities are offered as collateral. 

The securities which are acceptable as collateral include shares, mutual funds, fixed deposits, and insurance policies. The value of the loan depends on the cash value of all these securities together.

It is possible to withdraw funds from this overdraft facility, but interest must be paid only on the funds withdrawn during the period for which the funds were used. 

Which Securities Are Eligible For Loan?

Not all securities are eligible for a loan. Here is a list of all securities that can be pledged for loan.

What Is The Eligibility Criteria For Loan Against Securities?

To qualify for a loan against securities from a bank, individuals must meet the following criteria:

What Are The Advantages Of Loan Against Securities?

Many financial institutions provide loans against securities to meet their clients' short-term financing needs. 

These types of loans, which allow people to fulfill their dreams without selling their investments, include loans secured by shares, government bonds, insurance policies, and other types of investments.

Here are 3 reasons to prove why taking a loan against securities is a wise choice.

Easy Processing & Quick Financing

Procuring funds during emergencies can be very challenging. 

The eligibility for a loan against securities is not based on any proof of income or creditworthiness. 
These loans are secured, and the approval procedure is easier. Additionally, the disbursal of funds is instant. 
Therefore, for many borrowers in need of emergency cash, a loan against shares proves to be a practical choice.

Low-Interest Rates & Flexible Repayment Terms

Since advances against various securities are secured loans, they carry lower interest rates when compared to unsecured loans. 
Moreover, your high-value securities and equity shares allow you to negotiate a repayment tenure suitable for you. 
Some lenders also provide you with the opportunity to foreclose the loan or make pre-payments without any extra charges. 

Better ROI & Continuous Gains

Even though your securities remain pledged against the loan, they remain invested in the market. 
These investments will continue to gain profits and high returns over time. Lenders do not have authority over these returns. 
So not only do these securities offer you instant loans, but they also benefit your long-term financial goals. 


Securities are valuable assets with both present and future value. Before taking a loan against equity shares or other valuable investments, you should do thorough research on the features of such loans--their interest rates, auto-renewable tenures, and zero prepayment charges.

Loan Against Securities FAQs

Yes, by opening a depository account with the lender and converting your physical securities into a dematerialized form, you can obtain a loan against security.

The majority of Indian banks give you the choice to foreclose your loan against securities account once the loan amount plus interest has been paid. However, a foreclosure fee will be applied and the foreclosure option varies from one bank to another. 

The interest rate for loans against securities ranges from 12 - 15% and differs from one bank to another. On top of the interest rate, banks will also charge processing fees of up to 2% of the loan amount. 

Several public and private banks such as HDFC, SBI, Axis, ICICI, Yes Bank, and more, offer loans against securities.

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