Overview of loans against financial assets in India
If you hold investments but need cash for a few months, selling can trigger tax, exit loads or the loss of future growth. A loan against financial assets lets you keep ownership while the lender holds a lien on the holding. You get funds, often as an overdraft limit, and you pay interest only on what you use.
These loans differ sharply by asset. A fixed deposit can fetch close to its full value as a loan, while shares and equity mutual funds get much lower advances and can face margin calls when prices fall. Bonds and insurance policies sit in between. This page helps you compare the six main options and pick the one that suits your holdings.
Types of loans against financial assets
| Loan | Security | In brief |
|---|---|---|
| Loan Against Securities | Secured | A loan against securities lets you borrow against shares, mutual fund units, bonds and similar listed investments by pledging them with a lender, without selling. |
| Loan Against Shares | Secured | A loan against shares lets you borrow money by pledging listed equity shares held in your demat account, without selling them. |
| Loan Against Mutual Funds | Secured | A loan against mutual funds lets you borrow by marking a lien on your fund units, so you keep your SIP and investment growth without redeeming. |
| Loan Against Bonds | Secured | A loan against bonds lets you borrow by pledging bonds you hold, such as government securities, corporate bonds, tax-free bonds or sovereign gold bonds, without selling them. |
| Loan Against Fixed Deposit | Secured | A loan against a fixed deposit lets you borrow against your FD without breaking it, usually up to about 90% of the deposit value. |
| Loan Against Insurance Policy | Secured | A loan against an insurance policy lets you borrow from the insurer or a lender using the policy's surrender value as security, typically around 80% to 90% of that value. |
EMI calculators for loans against financial assets
Each calculator is set up for how that loan is really repaid, with typical rates, a repayment schedule and the fees that change the true cost.
How to choose between loans against financial assets
- Look at how volatile the asset is. Fixed deposits and eligible insurance policies hold steady value. Shares and equity funds can fall quickly. The more volatile the asset, the lower the advance and the higher the chance of a margin call.
- Compare the loan-to-value ratio. A deposit may support a very high percentage of its value, while shares and equity funds get a much smaller share after the lender applies a haircut. A higher LTV means more cash but less cushion.
- Prefer overdraft limits for short needs. Many lenders sanction a limit against the pledged holding and charge interest only on the amount drawn. This suits short-term gaps better than a fixed-EMI loan, where interest runs on the full sum.
- Understand the lien and what you lose. Pledged units or shares are frozen. You may not be able to sell them, and dividends or maturity proceeds may be routed to the lender. Confirm this before pledging, especially for assets near maturity.
- Check the margin call rules. Ask when the lender will ask for more collateral or part-repayment if prices fall, and how many days you get. If you miss the deadline, the lender may sell part of the holding without further notice.
Estimate your EMI
Example values only. Replace them with the figures in your own offer.
Reducing-balance method. Excludes processing fees, GST, insurance and other charges.
Loans Against Financial Assets: frequently asked questions
What is a loan against financial assets?
It is a secured loan where you pledge shares, mutual fund units, bonds, a fixed deposit or an insurance policy and receive money based on its value. You keep ownership, but the asset is lien-marked until you repay. The loan can be a term loan or an overdraft limit.
Which financial asset gives the highest loan amount?
A fixed deposit usually supports the highest advance relative to its value, often close to 90% with the issuing bank. Shares and equity mutual funds get much lower percentages because prices swing. The exact percentage depends on the lender, the asset and current regulatory limits.
Is a loan against securities better than selling my investments?
It can be if you need money for a short period and want to avoid capital gains tax, exit loads or losing long-term growth. It is worse if the market is falling, because a margin call could force a sale at a low price. Compare interest cost with the tax you would pay.
What is a margin call?
A margin call is a lender's demand for extra collateral or part-repayment when the value of your pledged assets drops and the loan becomes too large for them. If you do not act within the stated time, the lender may sell part of the collateral to bring the loan back within limits.
Do these loans need a good credit score?
Credit history still matters, but the collateral carries much of the weight, so approval is often easier than for unsecured loans. Lenders may also check income and existing debts. Approval always depends on the lender's assessment of you and the asset, and is never assured.
Can I pledge assets held in a joint name?
Often only if all holders consent, and some lenders accept only specific holding patterns. For demat and fund holdings, the pledge is created through the depository or registrar with the account holders' authorisation. Check the lender's rules, since joint holdings can slow the process.
Explore other loan categories
Official sources and further reading
These guides are written from Reserve Bank of India rules and official scheme pages. Rules, rates and scheme terms change, so check the current position on these sites and in your lender's Key Fact Statement before you apply.
- SEBI. The securities market regulator, relevant to loans against shares, mutual funds and bonds.
- RBI: Key Facts Statement (KFS) for loans and advances. The Reserve Bank of India notification that tells lenders to give every borrower a plain-language statement of the full cost of a loan.
- RBI Complaint Management System. Where to take a complaint against a bank, NBFC or other regulated lender if the lender does not resolve it.
- RBI (Pre-payment Charges on Loans) Directions, 2025. Bars pre-payment charges on floating-rate loans taken by individuals for non-business purposes, for loans sanctioned or renewed from 1 January 2026.
- Reserve Bank - Integrated Ombudsman Scheme, 2021. The single complaint scheme for customers of banks, NBFCs and other RBI-regulated lenders.
- RBI: Free Annual Credit Report to Individuals. Credit bureaus must give you one free full credit report with score every calendar year.
- RBI Financial Education. Consumer guidance from the Reserve Bank of India on borrowing, fraud and your rights as a customer.
Edited by Hemant Kumar. Rates on this site are indicative ranges, not offers.
General information only. Rates and terms are indicative and vary by lender and applicant.