What is Loan Against Securities?
Loan against securities, or LAS, is the umbrella product for borrowing against a portfolio of financial instruments. You keep ownership and continue to earn dividends or growth in many cases, while the lender holds a lien on the holdings. This suits investors who need short-term cash and do not want to sell during a weak market or pay capital gains tax.
Lenders only accept assets from an approved list and then apply a haircut, which means they lend a percentage of current value. Equity-type assets get a smaller percentage than debt-type assets because prices swing more. Most LAS is offered as an overdraft limit, so you pay interest only on the amount drawn rather than on the whole sanctioned figure.
Loan Against Securities at a glance
| Typical loan amount | Roughly ₹50,000 to ₹1 crore or more, depending on portfolio value and lender policy |
|---|---|
| Tenure | Often 12 months, renewable, for overdraft limits; some term loans run longer |
| Indicative interest rate | Roughly 9% to 15% a year, charged on the amount drawn |
| Processing fee | Often about 0.25% to 1.5% of the limit, plus taxes, with minimum amounts at some lenders |
| Security / collateral | Lien or pledge on approved shares, mutual funds, bonds or other eligible securities |
| Typical time to disbursal | Often same day to a few days, once the pledge is created |
| Loan type | Secured |
Indicative ranges based on general market practice in India. Your offer will differ. Last reviewed 3 October 2026.
Who should consider Loan Against Securities?
- Investors with a diversified portfolio who need short-term liquidity and want to avoid selling holdings.
- Business owners who hold listed securities and need working capital for a few months.
- Long-term investors who prefer paying interest over triggering capital gains tax or exit loads.
- People waiting for another inflow, such as property sale proceeds, who need a bridge for a short period.
Loan Against Securities eligibility criteria
| Criterion | What lenders typically look for |
|---|---|
| Age and status | Resident individuals aged 18 or above, and sometimes HUFs, firms and companies. NRIs may be limited by lender policy and foreign exchange rules. |
| Eligible securities | The lender accepts only an approved list of shares, mutual funds and bonds. Illiquid, suspended or very volatile stocks are usually excluded. |
| Holding in your name | Securities should be in your name in demat form, free of existing pledges. Joint holdings often need all holders' consent. |
| Portfolio value | Lenders set a minimum portfolio value, often a modest figure, since the limit depends on approved value after haircut. |
| Credit check | Credit history and income may be reviewed, though the collateral carries much of the weight in approval. |
| KYC and demat | A completed KYC and a working demat account or registered fund folio are needed to create the pledge. |
Documents required for Loan Against Securities
- PAN, Aadhaar and recent photographs
- Address proof such as utility bill or passport
- Bank account statement for the last three to six months
- Demat account statement or holding statement showing eligible securities
- Mutual fund consolidated account statement, if funds are being pledged
- Income proof such as salary slips or ITR, if the lender requests it
- Signed loan agreement and pledge or lien authorisation forms
How does Loan Against Securities work, step by step?
- Check which assets are eligible. Ask the lender for its approved list and haircut. Not every share or fund qualifies, and the percentage you can borrow differs by asset.
- Apply with KYC and holding details. Share KYC, bank details and a holding statement. The lender assesses the portfolio's approved value and sets a drawing limit.
- Create the pledge or lien. You authorise a pledge of shares through your depository account or a lien on fund units through the registrar. Pledged holdings are frozen and cannot be sold freely.
- Receive sanction and limit. You receive the sanction letter with the limit, rate and fees, along with the Key Fact Statement. Read the margin call terms before accepting.
- Draw and repay as needed. In an overdraft you draw money when needed and pay interest only on the drawn amount. You can repay anytime and redraw within the limit.
- Release the pledge on closure. When you repay and close the facility, the lender releases the pledge so your securities become tradable again. Confirm this release in your demat or fund statement.
Estimate your Loan Against Securities EMI
Example values only. Replace them with the figures in your own offer.
Reducing-balance method. Excludes processing fees, GST, insurance and other charges.
Loan Against Securities interest rate, fees and charges
The main cost is interest on the amount you actually draw. Setup fees are usually lower than for property loans, but pledge, documentation and annual renewal charges can apply. A bigger cost is hidden: if prices fall and you cannot meet a margin call, the lender may sell holdings, locking in losses. Read the Key Fact Statement fully.
- Interest on drawn amount
- Charged daily on the outstanding overdraft, so a short, small draw costs far less than a fully drawn term loan.
- Processing fee
- A one-time percentage of the limit, often with a minimum and maximum, plus taxes.
- Pledge creation charges
- Depositories and registrars may levy small fees for creating or releasing a pledge, and lenders may add their own documentation charge.
- Annual renewal fee
- Overdraft limits are typically renewed each year and may carry a renewal fee. Ask whether the limit can be withdrawn at renewal.
- Penal charges
- If you fail to meet a margin call or pay interest on time, penal interest or forced sale of securities can follow.
Indicative rates as of October 2026. Figures are market ranges, not offers, and are reviewed every 90 days (next review January 2027). Your rate is fixed by the lender in the sanction letter and Key Fact Statement.
Worked example: what this loan really costs
Illustration for mutual fund units worth about 10 lakh marked under lien, using mid-range figures seen in the market as of October 2026. Your lender's Key Fact Statement will show your own numbers.
| Loan amount | ₹5,00,000 |
|---|---|
| Interest rate (reducing balance) | 10.5% a year |
| Tenure | 24 months |
| Monthly EMI | ₹23,188 |
| Total interest paid | ₹56,512 |
| Total repaid | ₹5,56,512 |
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), with r the monthly rate. Processing fees, GST and insurance are extra; the annual percentage rate in the Key Fact Statement includes them. Check the figures in our Loans Against Assets EMI calculator.
Pros and cons of Loan Against Securities
Advantages
- You keep your investments while raising cash
- Interest only on the amount used when structured as an overdraft
- Faster than property loans, often within days
- No need to sell, so no immediate capital gains tax or exit loads
Limitations
- Margin calls can force you to add collateral or repay quickly
- Pledged holdings are frozen and cannot be sold freely
- Falling markets can shrink your limit when you need money most
- Lenders can sell pledged securities if you default or ignore a margin call
Mistakes to avoid with Loan Against Securities
- Drawing the full limit
- Using the entire limit leaves no buffer when prices fall. Draw only a part, so a market dip does not trigger an immediate margin call.
- Pledging concentrated holdings
- If most of your pledged value sits in one volatile stock, a single price drop can cause a large shortfall. Spread across assets where possible.
- Ignoring margin call messages
- Alerts may arrive by SMS or email with short deadlines. Update contact details and act promptly to avoid forced sale.
- Using it to buy more securities
- Borrowing to chase market gains multiplies risk. Lenders may restrict this, and losses plus interest can leave you with debt after the holdings are sold.
Loan Against Securities compared with similar loans
- Loan Against Securities vs Loan Against Shares
- Loan against shares is the equity-only version of LAS. It usually carries a lower LTV and tighter approved lists, because share prices move faster than the value of bonds or debt funds.
- Loan Against Securities vs Loan Against Mutual Funds
- Loan against mutual funds uses fund units, pledged through registrars, with different advances for equity and debt funds. It suits investors who hold funds rather than direct shares.
- Loan Against Securities vs Personal Loan
- A personal loan is unsecured, with fixed EMIs and higher rates. LAS is cheaper and can be drawn flexibly, but your investments are at risk of sale if values fall and you cannot top up.
Rules and regulations that apply to Loan Against Securities
RBI rules set margin and exposure norms for lending against shares and other securities, and these have been revised in recent years, so lender limits and haircuts can differ and change. Lenders must provide a Key Fact Statement. Always read the margin call and sale clauses in your agreement.
Rules that protect you, with the source
- Key Fact Statement. For retail and MSME loans sanctioned from 1 October 2024, the lender must give you a KFS with the annual percentage rate and a repayment schedule before you sign, and cannot charge a fee that is not in it. RBI circular, 15 April 2024.
- Pre-payment charges. For floating-rate loans to individuals for non-business purposes sanctioned or renewed from 1 January 2026, no pre-payment or foreclosure charge can be levied. RBI Directions, 2 July 2025.
- Free credit report. Every credit bureau must give you one free full report with score each calendar year. RBI notification, 1 September 2016.
- Complaints. If the lender does not resolve a complaint within 30 days, you can go to the RBI Ombudsman free of charge. Integrated Ombudsman Scheme, 2021 · file at cms.rbi.org.in.
Loan Against Securities: frequently asked questions
What is a loan against securities?
It is a loan where you pledge shares, mutual fund units, bonds or similar assets with a lender and receive funds based on their approved value. You remain the owner and the holdings are frozen until repayment. Most are structured as overdraft limits, with interest on the drawn amount.
How much can I borrow against my securities?
It depends on the asset. Equity shares and equity funds usually support a much smaller percentage of value than debt funds or government bonds, after the lender's haircut. The final limit is set by the lender's approved list and policy, and it changes as prices move.
What is the interest rate on a loan against securities?
Indicatively roughly 9% to 15% a year, depending on the lender, the asset and your profile. In an overdraft you pay interest only on the amount drawn, so effective cost can be lower for short, partial use than for a fixed-EMI loan.
What happens if the market falls after I take the loan?
Your collateral value drops, and the lender may issue a margin call asking you to add securities or repay part of the loan. If you do not act within the stated time, the lender may sell part of your holdings, which can lock in a loss.
Can I still receive dividends on pledged shares or funds?
Often yes, since ownership stays with you, but terms vary. Some lenders route corporate benefits or maturity proceeds to the loan account. Ask how dividends, bonuses and redemptions are handled before pledging, particularly if you rely on the income.
Is it better to sell investments or take a loan against securities?
A loan suits short-term needs when you expect to repay soon and do not want to disturb long-term plans or pay tax. Selling suits permanent needs or if interest would exceed expected returns. Compare interest cost, tax impact and risk of a margin call.
Are there any restrictions on how I use the loan?
Many lenders restrict using the funds to buy more securities or for speculation, and some do not allow certain business uses. Personal and business working capital uses are commonly accepted. Check the end-use clause, since misuse can lead to recall of the facility.
Loan Against Securities in your city
Local guidance, documents and an EMI calculator for 1461 cities across India.
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.
This page is general information, not personalised financial advice and not an offer. Rates and terms shown are indicative and vary by lender and applicant. Verify with the lender and read the Key Fact Statement before you sign.