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Complete Guidelines For Loan Against Securities

If you need to meet a financial emergency urgently and wondering whether to mortgage your property, shares, or other security assets to procure a loan, then here is a pathbreaking solution for you: Loan against securities, which enables you to raise money against your shares, mutual funds, and life insurance policies without even selling them.

The definition and Working Process of Loan Against Securities

loan against securities is an outstanding solution where you can pledge your investment securities as collateral with the banking or non-banking financial institutions and, in this way, avail of your loan for your various needs. Thus, it prevents you from hastily selling your investment instruments; instead, you get the loan by calculating the total value of the securities pledged. Following the same rule as with a loan against property, the principal amount you acquire is simply a specific percentile of the pledged securities, and the interest rate is decided on your chosen loan repayment tenure.

Typically, it works with the lender opening an OD account in the borrower’s name, and then the lender sets the interest rates based on the withdrawal amount during the tenure. You are only required to pledge particular security and don’t need to pay interest on the entire amount, and with these, you can avail yourself of a steady cash flow in your most needy situations. This way, your investments continue to give you various benefits, such as dividend payments or bonus shares.

The Securities Can Be Pledged to Acquire a Loan Against Securities

These following securities are typically accepted as collaterals by most lenders and on which mostly your loan against securities eligibility also depends.

  • Mutual fund units
  • Insurance policies
  • DEMAT shares
  • UTI bonds
  • NABARD bonds
  • Non-convertible debentures

Features and Benefits That You Get with Loan Against Securities


  1. Acquiring higher loan amounts

Borrowers can get the amount of INR 100,000 as the minimum loan against securities ( LAS), while the maximum amount limit varies depending on the securities pledged. For example, an individual pledges the Equity Oriented MF in Unit Form as collateral will get Rs. 10 lakhs. In contrast, someone who pledges Debt Oriented MF in Unit/ Demat Form will get Rs. 5 cores as the loan amount.

2. Doubles as a Personal Loan

With the LAS loan amount and its remarkably low-interest rates on a personal loan, you can easily meet any personal expense. As seen in a personal loan, there is also no specific end-use restriction on the utilization of the loan amount.

3. Interest Rates and Overdraft

The loan against securities is very similar to an overdraft loan. Instead of the funds borrowed, you only need to pay the interest on the loan amount you utilize from your current account. 

4. Transparent Transaction Process

LAS loan follows a very secure transaction process. The borrower provides a separate overdraft account to track all the transactions where all the payments will be reflected. Here in the account, the lenders also mention upfront all the charges, namely interest rate, processing fees, and others, associated with the loan against securities.

5. Access the Account at Any Given Time

The LAS account is accessible from anywhere in the world and on a 24×7 basis. You can also seek assistance from the lender’s customer care whenever possible.

Basic Eligibility Criteria for Loan Against Securities

The loan against securities eligibility for any individual requires the following criteria:

  • The borrower Should be a resident or non-resident of India, although in the second case, they can apply with another applicant jointly.
  • Should be at the age of least 21 years.
  • Applicants must be salaried or self-employed.
  • Individuals with a DEMAT account in partnership with a recognized depository participant can be eligible for a loan against shares and securities. In contrast, no DEMAT account is required for a loan against mutual funds.

The Documents Necessary for Loan Against Securities

Valid documents such as identity, address, and income proof are required when applying for a LAS loan. Some of them are as follows:

  • PAN card
  • Aadhaar card 
  • Driver’s license,
  • Passport
  • Voter’s ID  
  • Employer ID card
  • Latest utility bill documents such as electricity, gas, and landline.
  • Salary slips or bank statements of the let 3 to 6 months.

Apart from that, applicants need to provide a list of details of the security they wish to pledge with names and number of units owned as security proofs to avail of the loan against security. 


Evaluating all the above points, it is evident that the loan against security is an absolute and pathbreaking solution to finance your emergency needs as it helps you with low-interest rates and high loan amounts.

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