In today’s fast-paced financial landscape, unlocking the value of your investments without selling them is a smart strategy. One such method is opting for a loan against shares. This facility allows investors to access short-term credit by pledging their equity shares. With the entire process now digitized, applying for it online is quick and convenient.
What Is Loan Against Shares?
A loan against shares (LAS) is a type of secured loan where individuals can borrow funds by pledging their listed shares as collateral. It enables shareholders to raise money without liquidating their holdings. The loan amount sanctioned usually depends on the market value of the pledged shares and the lender’s margin requirements, typically ranging from 50% to 70% of the current market value.
This credit facility is ideal for meeting short-term financial needs like business expansion, working capital, or emergency personal expenses. The best part? Borrowers continue to enjoy the benefits of capital appreciation and dividends on their pledged shares.
Benefits of Loan Against Shares
No Need to Sell Shares
You retain ownership and can benefit from price appreciation and dividends.
Quick Disbursal
Funds are usually credited within 24–48 hours after approval.
Lower Interest Rates
Compared to unsecured loans, LAS comes with relatively lower interest rates.
Flexible Repayment
Tenures and repayment structures are generally flexible, suiting both individuals and businesses.
Eligible Securities for LAS
Typically, only shares listed on approved stock exchanges (like NSE or BSE) and part of the lender’s approved list of securities qualify for pledging. Apart from equity shares, some lenders also allow mutual funds, bonds, and ETFs as collateral under similar loan schemes.
Loan Against Shares Process Online
The loan against shares process is now streamlined with minimal paperwork and real-time verification. Here's how to apply online:
1. Check Eligibility and Documentation
Ensure you are an Indian resident and hold dematerialized shares in your name. Key documents include:
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PAN and Aadhaar card
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Demat account details
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Recent bank statement
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Income proof (varies by lender)
2. Choose a Lender
Compare interest rates, eligible share lists, processing fees, and maximum LTV (Loan-to-Value) across various banks and NBFCs. Popular providers like HDFC Securities, ICICI Direct, and Bajaj Finserv offer competitive LAS products online.
3. Online Application
Visit the lender’s official portal or mobile app. Log in or create an account and initiate the LAS application.
4. Pledge Shares via NSDL/CDSL
After application, you’ll be redirected to the depository (NSDL or CDSL) to authorize share pledging from your Demat account. This is done via an OTP-based e-sign process, ensuring complete security.
5. Loan Disbursal
Once the shares are successfully pledged and the loan is approved, funds are transferred directly to your bank account, often within a day.
Points to Remember
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The loan amount may fluctuate based on share price volatility.
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Failure to maintain margin calls may result in forced selling of pledged shares.
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Regular monitoring of share performance and LTV ratio is essential.
Conclusion
A loan against shares offers a smart, efficient way to unlock liquidity without giving up your investments. With a streamlined loan against shares process, applying online has never been easier. This facility can be a great financial cushion in times of need, provided it is managed responsibly.
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