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Loan Against Security

Unlock the potential of the shares and equities that you hold, while your investments in these instruments continue to reap benefits from stock market.

What is Loan Against Securities

Loan against Securities (LAS) is loan extended against pledging of securities. An individual can avail of LAS against the below mentioned products:

1. Demat shares
2. Non-convertible debentures
3. Mutual fund units
4. NABARD bonds
5. UTI bonds
6. National Savings Certificates/ Kisan Vikas Patra (accepted only in demat form)
7. Insurance policies

To avail of a LAS and to ensure smooth transaction, a current account is opened in the borrower's name and the rate of interest is calculated on the amount withdraw by him/ her, and only for the period of utilization.

Benefits of LAS

No liquidity of securities : LAS provides quick cash to the borrower to meet emergencies without liquidating investments. Dividends and bonuses for the pledged security continue to be received by the borrower as the share prices go up.

Competitive rate of interest : The rate of interest charged is more competitive compared to the rate of interest charged on for example, personal loans.

Pay interest only on used amount : Banks give the option of taking an overdraft facility where one has to pay interest only on the utilized amount

No Pre-payment penalty : No prepayment penalty gets charged incase complete amount is repaid by the borrower

Features of LAS

It is considered as a secured loan since your securities are kept as collateral security. The tenure of LAS is one year which can be renewed as per your need. Rate of Interest charged varies from bank to bank, but it generally falls in the bracket of 12% - 15% per annum.

Banks and financial institutions charge approximately 2 % as processing fees. The loan amount to be approved depends on the type of security. For example, in the case of equity shares typically, the loan amount approved is equivalent to 50% of the value of such shares. There are no prepayment charges for LAS. Any individual between 18 years - 65 years can apply for LAS.

Documents required for LAS

Regular income and KYC documents need to be submitted with the lending institution. Apart from these, a holding statement and pledge form needs to be furnished. In case of joint D-Mat holding, a guarantor form may also be required.

Credit score and LAS

A higher or -good- credit score can translate into some tangible benefits for the borrower, as it typically means that the loan would be offered at the most competitive interest rates and other terms.

How Credit Sudhaar can help you?

We offer a comprehensive study on LAS offerings with various banks and NBFCs in India. You can compare these offers based on your requirement before applying for this type of loan.

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