{"id":9312,"date":"2025-12-04T04:30:00","date_gmt":"2025-12-04T04:30:00","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?p=9312"},"modified":"2025-12-01T07:49:58","modified_gmt":"2025-12-01T07:49:58","slug":"loan-against-securities-guide","status":"publish","type":"post","link":"https:\/\/lemonn.co.in\/blog\/finance\/loan-against-securities-guide\/","title":{"rendered":"All About Loan Against Securities (LAS)"},"content":{"rendered":"
\"All<\/figure>\n\n\n

What is LAS?<\/strong><\/h2>\n\n\n\n

A Loan Against Securities (LAS) lets investors unlock cash without selling their investments. You pledge your financial assets, like shares, mutual funds, or bonds, to a bank or NBFC and get a loan in return. It\u2019s a simple concept: your investments become collateral, and you continue to own them while using their value to meet personal or business needs.<\/p>\n\n\n\n

In India, LAS has grown popular among retail and high-net-worth investors because it offers liquidity without disturbing long-term investment plans. It\u2019s quick, flexible, and doesn\u2019t require you to part with assets that might appreciate later.<\/p>\n\n\n\n

Why Investors Use Loans Against Securities<\/strong><\/h3>\n\n\n\n

Investors use LAS for short-term funding, buying property, managing emergencies, covering business expenses, or even grabbing new investment opportunities. It\u2019s especially useful when selling assets would trigger taxes or disrupt compounding returns.<\/p>\n\n\n\n

For example, if your stock portfolio has \u20b925 lakh in value, you could get a \u20b910\u201312 lakh loan within hours by pledging it. <\/p>\n\n\n\n

Benefits Over Traditional Loans<\/strong><\/h3>\n\n\n\n

LAS stands out because it\u2019s secured, fast, and low-cost compared to personal loans or credit cards. You don\u2019t need income proofs like IT returns or salary slips, and the approval process is often digital. Since banks have your securities as collateral, interest rates are lower, usually between 9% and 12% annually, depending on the lender and asset quality. You also have the freedom to repay anytime without penalties.<\/p>\n\n\n\n

Types of Securities Eligible for LAS<\/strong><\/h2>\n\n\n\n

Shares and Equity Investments<\/strong><\/h3>\n\n\n\n

Listed shares are the most common form of collateral under LAS. Banks and NBFCs approve loans against equities from approved companies listed on NSE or BSE. The Loan-to-Value (LTV) ratio typically ranges from 50% to 60%, depending on market volatility and the stock\u2019s performance history.<\/p>\n\n\n\n

Mutual Funds (Debt & Equity)<\/strong><\/h3>\n\n\n\n

Mutual funds, both equity and debt, can also be pledged. Many lenders have tie-ups with fund houses that allow electronic pledging. Debt mutual funds generally attract higher LTVs (up to 80%) because they\u2019re less volatile than equity schemes. Platforms like CAMS and KFintech have made this process digital, enabling instant lien marking and approvals.<\/p>\n\n\n\n

Bonds and Debentures<\/strong><\/h3>\n\n\n\n

Several institutions accept corporate bonds, government securities, and debentures. They\u2019re preferred because they offer a steady income and lower risk than stocks. LTV ratios range from 65% to 75%, depending on the issuer\u2019s credit rating and maturity.<\/p>\n\n\n\n

Insurance Policies and Other Approved Securities<\/strong><\/h3>\n\n\n\n

Certain life insurance policies with surrender value, along with ETFs and RBI Relief Bonds, also qualify. However, lenders evaluate each case individually. Generally, only non-term insurance policies are accepted as they have a measurable surrender value.<\/p>\n\n\n\n

How Loan Against Securities Works<\/strong><\/h2>\n\n\n\n

Eligibility Criteria for Borrowers<\/strong><\/h3>\n\n\n\n

Most banks offer LAS to individuals, HUFs, NRIs, and corporate entities. Basic eligibility includes:<\/p>\n\n\n\n

    \n
  • Applicant should be 18 years or older<\/li>\n\n\n\n
  • Securities must be in the applicant\u2019s name<\/li>\n\n\n\n
  • The securities must be listed or approved by the lender<\/li>\n\n\n\n
  • KYC and demat details must be verified<\/li>\n<\/ul>\n\n\n\n

    Many institutions, such as HDFC Bank, ICICI Bank, Axis Bank, and SBI, offer LAS products for both retail and business customers.<\/p>\n\n\n\n

    Loan-to-Value (LTV) Ratio Explained<\/strong><\/h3>\n\n\n\n

    The LTV ratio defines how much loan you can obtain relative to the value of your pledged securities. For example, if your share portfolio is worth \u20b920 lakh and the lender\u2019s LTV is 50%, your loan eligibility will be \u20b910 lakh.
    If the market value of the securities falls, the lender might ask you to top up collateral or repay part of the loan; this is called a margin call.<\/p>\n\n\n\n

    Interest Rates and Repayment Terms<\/strong><\/h3>\n\n\n\n

    Interest rates for LAS range between 8.5% and 12% per annum, usually lower than unsecured loans. Some lenders offer overdraft (OD) facilities, meaning interest is charged only on the amount utilized. Repayment terms can extend from 12 months to 36 months, and you can prepay anytime.
    HDFC Bank, for instance, offers overdraft-based LAS starting at \u20b910 lakh, while ICICI Bank provides digital LAS against mutual funds starting at \u20b91 lakh.<\/p>\n\n\n\n

    Advantages of Loan Against Securities<\/strong><\/h2>\n\n\n\n

    Quick Access to Liquidity<\/strong><\/h3>\n\n\n\n

    LAS is among the fastest credit products in the market. Digital pledging of securities enables same-day disbursal. Compared to loans that require property verification or income checks, LAS gives instant access to cash with minimal paperwork.<\/p>\n\n\n\n

    Retaining Ownership of Investments<\/strong><\/h3>\n\n\n\n

    You keep earning dividends, interest, and capital gains while your assets are pledged. That means your wealth continues to grow, and you avoid selling during market dips. Once the loan is repaid, the lien is removed, and you regain full control of your securities.<\/p>\n\n\n\n

    Flexible Repayment Options<\/strong><\/h3>\n\n\n\n

    Borrowers enjoy flexibility in repaying principal and interest. Many choose the overdraft route, repaying as funds become available. There\u2019s no compulsion to follow EMI structures. You can clear dues anytime, ideal for business owners and investors managing uneven cash flows.<\/p>\n\n\n\n

    Risks and Limitations of LAS<\/strong><\/h2>\n\n\n\n

    Market Volatility and Margin Calls<\/strong><\/h3>\n\n\n\n

    The biggest risk is market movement. If the value of pledged securities drops sharply, the lender may issue a margin call. You\u2019ll need to either deposit more securities or repay part of the loan to restore the LTV ratio. Failure to do so can lead to forced liquidation of pledged holdings.<\/p>\n\n\n\n

    Limited Loan Value Compared to Security Value<\/strong><\/h3>\n\n\n\n

    LTV ratios cap the maximum loan you can access. For volatile securities like equities, you may get only 50% of the market value. So, if your \u20b910 lakh stock portfolio swings lower, your loan limit might shrink overnight.<\/p>\n\n\n\n

    Risk of Losing Securities on Default<\/strong><\/h3>\n\n\n\n

    If repayments are missed, lenders have the legal right to sell pledged securities to recover dues. Though you retain ownership during the tenure, defaulting can permanently erase your holdings.<\/p>\n\n\n\n

    Loan Against Securities vs. Other Types of Loans<\/strong><\/h2>\n\n\n\n

    LAS vs. Personal Loan<\/strong><\/h3>\n\n\n\n

    Personal loans are unsecured, meaning they don\u2019t need collateral. But that freedom comes at a cost; interest rates can touch 15%\u201324%, and approval takes longer. LAS, being secured, attracts lower rates and offers quicker disbursal.<\/p>\n\n\n\n

    LAS vs. Loan Against Property<\/strong><\/h3>\n\n\n\n

    Loan Against Property involves lengthy valuation, legal checks, and mortgage registration. It\u2019s ideal for large amounts and long tenures. LAS, in contrast, is faster and better for short-term liquidity because the collateral is already liquid and market-linked.<\/p>\n\n\n\n

    LAS vs. Gold Loan<\/strong><\/h3>\n\n\n\n

    Gold loans also provide secured funding, but you need to pledge physical gold, which may not be convenient. LAS allows you to keep your investments intact digitally and use them as collateral. Plus, you can continue earning returns on them while availing the loan.<\/p>\n\n\n\n

    Key Things to Consider Before Taking LAS<\/strong><\/h2>\n\n\n\n

    Evaluating Interest Rates and Charges<\/strong><\/h3>\n\n\n\n

    Compare interest rates across lenders. Some may charge lower rates but include processing or maintenance fees. Check for prepayment penalties, renewal charges, and annual maintenance costs on overdraft facilities.<\/p>\n\n\n\n

    Understanding LTV and Margin Requirements<\/strong><\/h3>\n\n\n\n

    Before pledging securities, review how the lender manages LTV ratios. Stocks with high volatility may attract lower limits or frequent margin calls. If you\u2019re pledging mutual funds or bonds, confirm how daily NAV movements affect your eligibility.<\/p>\n\n\n\n

    Choosing the Right Bank or NBFC<\/strong><\/h3>\n\n\n\n

    Opt for lenders with transparent valuations, quick digital processes, and flexible repayment terms.<\/p>\n\n\n\n

      \n
    • HDFC Bank LAS:<\/strong> Against shares and mutual funds; limits up to \u20b95 crore.<\/li>\n\n\n\n
    • ICICI Bank LAS:<\/strong> Digital facility via CAMS\/KFintech.<\/li>\n\n\n\n
    • Axis Bank LAS:<\/strong> Overdraft-based, up to \u20b920 crore for HNIs.<\/li>\n\n\n\n
    • SBI LAS:<\/strong> Available for individuals and corporates with listed shares.<\/li>\n<\/ul>\n\n\n\n

      Conclusion – Is LAS the Right Choice for You?<\/strong><\/h2>\n\n\n\n

      A Loan Against Securities is one of the smartest ways to raise short-term funds without liquidating your investments. It\u2019s fast, flexible, and cost-effective. For investors who understand market risks and maintain disciplined repayments, LAS can serve as a powerful liquidity tool.<\/p>\n\n\n\n

      However, you must keep an eye on market conditions. If your securities drop in value, the lender may ask for additional margin. Hence, LAS suits those with steady cash flows and diversified portfolios.<\/p>\n\n\n\n

      FAQs<\/strong><\/h2>\n\n\n
      \n
      \n
      \n

      Q1: What is the maximum loan amount I can get against securities?<\/strong><\/h3>\n
      \n\n

      Banks and NBFCs typically offer LAS from \u20b91 lakh up to \u20b920 crore, depending on the type and value of securities pledged.<\/p>\n\n<\/div>\n<\/div>\n

      \n

      Q2: Which securities are accepted for LAS in India?<\/strong><\/h3>\n
      \n\n

      Approved listed shares, mutual funds (equity and debt), bonds, debentures, ETFs, and life insurance policies with surrender value are eligible.<\/p>\n\n<\/div>\n<\/div>\n

      \n

      Q3: What happens if the value of my securities falls?<\/strong><\/h3>\n
      \n\n

      The lender may issue a margin call. You\u2019ll need to pledge more securities or repay part of the loan to maintain the loan-to-value ratio.<\/p>\n\n<\/div>\n<\/div>\n

      \n

      Q4: Is LAS better than taking a personal loan?<\/strong><\/h3>\n
      \n\n

      Yes, for those who hold eligible securities. LAS offers lower interest rates, faster processing, and flexible repayment. Personal loans are better if you lack investments to pledge.<\/p>\n\n<\/div>\n<\/div>\n

      \n

      Q5: Can NRIs avail loan against securities in India?<\/strong><\/h3>\n
      \n\n

      Yes, many banks like HDFC Bank, ICICI Bank, and Axis Bank provide LAS to NRIs, subject to FEMA guidelines and approved security lists.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

      What is LAS? A Loan Against Securities (LAS) lets investors unlock cash without selling their investments. You pledge your financial assets, like shares, mutual funds, or bonds, to a bank or NBFC and get a loan in return. It\u2019s a simple concept: your investments become collateral, and you continue to own them while using their […]<\/p>\n","protected":false},"author":3,"featured_media":9263,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_ayudawp_aiss_exclude":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9312","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/9312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/comments?post=9312"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/9312\/revisions"}],"predecessor-version":[{"id":9314,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/9312\/revisions\/9314"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media\/9263"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=9312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/categories?post=9312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/tags?post=9312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}