Loan Against Securities In Easy Steps

In modern world most of the people are much wise in respect of financial literacy and they start building portfolios of bonds, deposits, equity shares and mutual funds. But there sometimes happens to be an unexpected money requirement in lieu of health hazard or any unexpected casualty. At that time it becomes a complicated jargon whether to raise funds via personal loan or by selling the securities i.e. Stocks, Mutual Funds etc. One question arises in the mind of the retail investor whether he will succeed in rebuilding the portfolio of Stocks or Mutual Funds, Bonds etc. if he sells his folios now. Loan against securities is a facility offered by several banks and non-banking finance companies. It is a good alternative instead of taking Personal loan in respect of loan amount you desire and the interest rate.


The facility is available for resident Indians only, NRIs are not allowed. Investment in stocks and mutual funds are made through banks, so your bank will give you the loan on the basis of your investment value by date.

Loan amount

Loan amount varies from minimum Rs. 50,000/- to maximum Rs. 20 lakh. Loan is sanctioned on the basis of the value of securities in demat account or Mutual Fund. Suppose your investment is Rs. 8 lakh and with the earned return the current valuation of total investment is Rs. 12 Lakh, then you can get maximum loan of 50% of Rs. 12 lakh i.e. Rs. 6 Lakh.

Similarly, if you have invested Rs. 5 lakh in mutual fund and its’ current valuation is Rs. 8 Lakh then you are eligible to get a loan maximum 50% of Rs. 8 Lakh i.e. Rs. 4 Lakh.


This facility is available to meet contingencies and needs of personal nature. For any sudden situation like health hazard this loan is available. It will take 3 business days after applying for loan against securities.


You need to pledge of the securities i.e., Stocks or Mutual fund against which loan will be sanctioned.

Documents Required

Following documents are required.

  • Passport size photograph of the applicant.
  • Know your customer documents.
Features of Loan against Securities
  • Processing fee is nil.
  • Loan tenure is annual and renewal per year.
  • As you have pledge the Stocks or Mutual Funds in the demat account, so no other security is required.
  • Loan amount is calculated on the basis of the valuation of your share price or the accumulated money in mutual fund folio.
Interest rate

Interest rate varies from bank to bank. Banks receive loan from RBI at certain interest rate. This rate is called base rate. RBI charges equal base rate for all banks. Now banks offer loans after including its profit with this base rate. Suppose a bank imposes 3% more with the base rate, so the customer receiving the loan will have to pay 8%+3% = 11% interest on the loan against securities. With the fluctuation of base rate, the interest rate may vary from time to time.

Repayment Schedule

The total loan with interest can be paid off within the maximum 30 months from the date of sanction of the loan against securities.

If you have any question regarding loan against shares or securities feel free to comment so that we have a discussion. If you have found this post helpful share this post with your loved ones.

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