Instant Loan Against Securities: Access Funds Without Selling Your Investments

Unexpected expenses or short-term liquidity needs can arise at any moment. Whether it’s an urgent medical bill, a sudden business opportunity, or educational expenses, you might find yourself needing quick funds. .

What is a Loan Against Securities?

A loan against securities (LAS) is a type of overdraft facility where you pledge your financial assets—like shares, mutual funds, bonds, or insurance policies—as collateral to receive funds. Unlike traditional loans that might involve lengthy paperwork and credit checks, this facility leverages your existing investments to offer an instant line of credit.

Banks and financial institutions evaluate the value of your pledged securities and sanction a loan amount based on a certain percentage (usually between 50% and 80%) of their current market value. You continue to earn dividends and returns on your investments, even while they’re pledged.

Why Choose an Instant Loan Against Securities?

Here are some compelling reasons to consider this financial tool:

1. Speed and Convenience

Thanks to digital platforms, many lenders now offer instant LAS approvals online. With minimal paperwork and no physical branch visits, you can get funds credited to your account within hours.

2. No Need to Liquidate Investments

Selling your investments in a rush can lead to capital gains tax liabilities or missed future gains. A loan against securities lets you meet your immediate needs while preserving your long-term investment goals.

3. Lower Interest Rates

Compared to personal loans or credit cards, loans against securities come with lower interest rates, as they are secured by your assets. This makes them a cost-effective borrowing option.

4. Flexible Usage

The loan amount can be used for any purpose—education, business, wedding, travel, home renovation, or emergencies—giving you financial flexibility without questions from the lender.

5. Pay Interest Only on Usage

In most cases, the interest is charged only on the amount utilized, not the entire sanctioned limit. This makes it an economical solution if you’re unsure about how much you’ll actually need.

Types of Securities You Can Pledge

Different lenders accept a wide range of financial instruments, including:

• Equity shares (listed)
• Mutual fund units (equity and debt)
• Fixed maturity plans (FMPs)
• Insurance policies (with surrender value)
• Government bonds and savings certificates
• Exchange-Traded Funds (ETFs)

It’s essential to check with your lender about the list of acceptable securities and the applicable loan-to-value (LTV) ratio for each.

Who Can Apply?

Typically, this facility is open to:

• Resident Indian individuals
• Hindu Undivided Families (HUFs)
• Corporates and partnership firms

Some platforms also offer LAS facilities to NRIs, subject to regulations.

Application Process: How It Works

Getting an instant loan against securities is easier than ever:

1. Select a lender or fintech platform offering LAS.
2. Create an account and submit your KYC documents online.
3. Pledge your securities through a digital process (via NSDL/CDSL).
4. Get a credit limit sanctioned based on the market value and type of securities.
5. Withdraw funds as needed via net banking or a linked overdraft account.

Some apps even provide real-time tracking and management tools, making the experience seamless.

Key Considerations

While LAS is a great facility, keep these points in mind:

• Market Risk: If the market value of pledged securities drops, the lender may ask for additional collateral (a process called a margin call).
• LTV Ratio Limits: Not all securities fetch the same loan value. Equity shares usually have a lower LTV compared to debt funds or bonds.
• Tenure and Renewal: Most LAS facilities are for 12 months but are renewable annually.

Final Thoughts

An instant loan against securities is a smart and efficient way to access liquidity without compromising your investment strategy. It empowers you to meet urgent financial needs while keeping your long-term goals intact. With online platforms simplifying the process, unlocking funds from your portfolio has never been easier.