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What is Loan Against Securities?
Loan against securities is a type of personal loan in which you pledge your life insurance policies, stocks, shares, bonds, fixed maturity plans and mutual funds as security/collateral with the lender against the borrowed amount. Loan against securities is the same as overdrafts in which you can withdraw money from your bank account and pay interest only on the utilized amount. It helps you to raise funds to meet your urgent cash requirements. Read on for its features, interest rates, eligibility, documents required and much more.
Features of Loan Against Securities (LAS)
- Interest rate: 8.00% p.a. onwards
- Loan amount from Rs. 25,000 and up to Rs. 20 lakh, may exceed
- No-end use restriction
- Secured personal loan – Security/Collateral is required by the bank
- Acts almost the same as an Overdraft facility
- Interest rate paid only on the utilized amount
- Repayment Tenure: Up to 3,6,9,12 months – Shall vary as per lender
- Loan against pledged investments in form of policies, shares, bonds, etc.
- High loan to value: Loan up to 85% of the asset value of your securities
Loan Against Securities Interest Rates
Find below the interest rates offered by leading financial institutions:
| Lenders | Interest Rates (p.a.) |
| Tata Capital | 8.00%-20.00% |
| State Bank of India | 10.65%-11.15% |
| Axis Bank | 11.00%-13.75% |
| Kotak Mahindra Bank | 8.00%-11.00% |
| Indian Bank | 9.05%-10.00% |
| Punjab National Bank | 9.25% |
| IDBI Bank | 10.10%-11.10% |
| Karnataka Bank | 10.93% |
Rates as of 26th June 2024
Additional Lenders offering LAS
Additional Leading Banks/NBFCs offering LAS at competitive interest rates include ICICI Bank, Yes Bank, IndusInd Bank, Bank of Baroda, Standard Chartered, IIFL Finance,and many more.
Eligibility Criteria for Loan Against Securities
- Applicants must be Indian residents
- Age: Minimum 18 years and maximum 70 years
- Salaried or self-employed individuals are eligible
- Must have approved securities to pledge
- No previous default with any financial institution
- No past criminal background
Detailed List of approved Securities from selected Banks/NBFCs
- Life Insurance Policies
- Mutual Funds
- Demat Shares
- Stocks
- Equity Shares
- Fixed Maturity Plans (FMPs)
- Employee Stock Ownership Plan (ESOP)
- Initial Public Offerings (IPOs)
- Exchange Traded Funds (ETF)
- Gold Deposit Certificates (GDC)
- National Savings Certificates (NSC)
- Kisan Vikas Patra (KVP)
- Non-Convertible Debentures (NCD)
- NABARD’s Bhavishya Nirman Bonds and many more
Documents Required to apply for Loan against Securities
- Duly filled application form and loan agreement
- Passport-sized photographs
- Applicant’s KYC documents: Identity proof, Age proof and Address proof
- Demat Account Statement or Statement of Holdings (MF)
- Pledge form or request letter for pledging of securities
- Guarantor Form – Optional (Mandatory for Joint holding)
- Any other document required by the bank/NBFC
FAQ’s on Loan Against Securities
Can I avail this loan if I own only 1 single investment instrument?
Yes, you can avail loan against securities facility against 1 investment instrument provided that instrument is included in the approved list of LAS eligible instruments of the concerned lender.
How much funds can I get on the securities I will pledge?
The loan amount offered against your pledged securities would depend on the LTV ratios set by the concerned lender for those securities. The LTV ratios set for each instrument can vary widely depending on the asset class of those securities viz equities, debt mutual funds, equity mutual funds, gold bonds, bonds/debentures, insurance policy, etc.
Once I pledge my securities, can I still own the income earned through dividends/bonus from those securities?
Yes, the income earned from your pledged securities, in the form of dividends/bonus, etc, would be paid to you.
Should my shares be in demat form for availing loan against shares?
Yes, your shares can be in demat form for availing loan against shares.
Should my mutual funds be in demat form for availing loan against mutual funds?
Mutual funds held in both demat form and physical form can be pledged for availing loan against mutual funds.
I have shares in physical form. Can I avail a loan against them?
You cannot avail loan against shares in physical form. However, you can convert the physical shares into Demat form through a depository account and avail loan against them.
Can I add more securities to the same loan?
Yes, you may add more securities to the same loan to increase the drawing power of your account provided they are included in the list of eligible securities.
What is the minimum age to take LAS?
The minimum age to apply for loan against securities is 18 years.
How much loan can I get on mutual funds?
Theloan amount against your mutual funds would depend on the respective LTV ratios set for those funds by the lender.