Personal Loan

Everything You Need To Know About Loan Against Securities In 2022


Life is pretty unpredictable. So, you never know when you might need money urgently. Thus, you have two options: take a loan or liquidate your property at that time. Taking a loan is always a better choice than selling your valuable assets. Loan against property is the most preferred and common type of secured loan nowadays. It helps you in catering to your urgent need. Plus, you can return the borrowed loan amount in monthly instalments over a specified tenure.

But did you know that you can also take a loan against securities such as shares, mutual funds, bonds, etc.? Well, you can. You can pledge your securities to a bank or financial institution to get a loan. Loan against securities is an easy, safe, and transparent process.

This article will give you detailed knowledge about loans against securities. Also, learn about how it works, eligibility to get a loan against security, and what securities you can offer.

What is Loan Against Securities?

A loan against security is one type of loan that you can get by putting your valuable asset as security to the lender. Consider you require urgent cash and don’t want to liquidate your investment. In that case, you can take a loan against securities such as shares, bonds, mutual funds, etc. Banks and other non-banking financial institutions offer this kind of loan to people.

You can give this investment instrument as an assurance to the lender. The lender calculates the total value of the securities and gives you a principal loan amount based on the type and value of the security. The interest rate of the loans against shares, mutual funds, bonds, etc., is decided based on the loan repayment tenure. 

How does Loan Against Securities Work?

The process of getting a loan against securities is easy. Step by step process from start to end is explained below:

  • The applicant applies for the loan by pledging some security from the lender individually or jointly.
  • If he/she meets the eligibility criteria, the lender opens an overdraft account in the borrower’s name after essential documentation.
  • Whenever the borrower needs cash, the lender gives the money from the overdraft account.
  • The interest rate is calculated based on the amount the borrower withdraws from the account during the tenure. The borrower does not have to pay the interest for the total amount of the loan he/she gets.
  • The borrower can repay the actual loan amount whenever he/she wants during the loan period.

What Securities Can You Offer to Get a Loan Against Securities?

The usual securities accepted by lenders to provide the loan against securities are given below:

  • Mutual fund units
  • Demat Shares
  • Bank Deposits
  • Insurance policies
  • UTI and NABARD bonds
  • Non-convertible debentures

Eligibility to Get a Loan Against Securities

Candidates are advised to check eligibility criteria before applying for the loan. The essential eligibility criteria to get a loan against securities are given below:

  • Applicant should be an Indian resident or NRI.
  • The age of the applicant should be above 18 years.
  • Candidate should be a salaried employee or self-employed.
  • Any individual with a DEMAT account with a recognized bank can apply for loans against shares or securities.

Required Documents for Loan Against Securities

Documents required for getting a loan against securities can vary per the bank’s rules and regulations. Some of the mandatory documents to acquire a loan against security are as follows:

  • Identity proof: PAN Card, Aadhaar card, Driving license, Voter ID card, Passport, Employer ID card, or any ID card issued by government authorities.
  • Address proof: Latest utility bills (electricity, gas, water, landline), Aadhaar card, Passport, Driving license, Voter ID card, etc.
  • Income proof: Income tax returns of the last 2 years, Bank statements of the last 3-6 months (if applicable), salary slips of the last 3-6 months (if applicable), etc.
  • Security details: List of securities that the individual wants to offer to lenders to get a loan.

Benefits of Loan Against Securities

You can get various benefits when you get a loan against securities. Some of the benefits of the scheme are given below.

  • No loss of ownership: When you need urgent finances, you don’t have to sell any of your assets to get financial help. You can easily get a loan against security to fulfill your urgent needs and repay the amount later to lenders.
  • Higher amount of loan: You can get a high amount of loan by using your valuable assets as security. Individuals can get a minimum of INR 1,00,000 loan, while the maximum amount can differ as per the securities offered. 
  • Lower interest rate: The interest rate of a loan against securities ranges between 9% to 10%. The interest rate of loans against shares or security depends on the type of loan you get. Apart from that, the borrower has to pay interest rate only on the fund he/she utilises from the current account and not the whole loan amount.
  • Doubles as a personal loan: The loan amount from LAS can be used to fund any of your expenses, and the interest rate is comparatively low than a personal loan. However, you can’t use the loan amount for any activities that are linked to stock market investment.
  • Transparent transaction: All transactions that happen in a loan against securities are transparent as the borrower gets a separate account to track all the transactions. All the payments made by the borrower from the loan amount will be directly reflected in the account.
  • Convenient repayment: The repayment of LAS is straightforward and flexible. The borrower has to only pay the monthly interest to lenders. He/she can pay the total loan amount whenever they want in the decided tenure.

How to Apply for a Loan Against Security?

You can apply online or offline to get a loan against securities. A step-by-step process for the same is given below.

  • Visit the bank’s nearest branch or visit the bank’s official website where you wish to apply for the loan.
  • Apply for the loan against security.
  • Upload or submit the required documents.
  • Bank will verify all the documents and details provided by you.
  • After completing the verification and process, you will get a loan amount in your account.


Loan against securities is a safe and secure choice that gives you a high loan amount at a low-interest rate. In case you have some urgent financial needs and you own securities such as mutual funds, bonds, shares, etc. LAS is the best option that you can go for. Piramal Finance has listed some best banks and financial institutions that offer loans against securities. You will get all the details in depth, including their interest rate, loan amount, etc. If you want more information on investment, a personal loan, or loans against shares, consult Piramal Finance.