A loan against securities is a facility where you can borrow money by pledging your financial assets, such as shares, bonds, or mutual funds, as collateral.
When you pledge your securities, the RBI Registered Lending Entity provides a loan based on the market value of those securities. The loan amount can be used as per your needs, while your investments remain intact.
Most RBI Registered Lending Entities accept a wide range of securities, including equity shares, mutual funds, bonds, and government securities.
The LTV ratio refers to the percentage of the security’s market value that can be borrowed. Typically, the LTV ratio is around 50-70%, depending on the type of security.
Individuals, sole proprietorships, partnerships, and companies who own eligible securities can apply for this loan.
The loan amount depends on the type and value of the securities you pledge. Different securities have different LTV ratios.
Interest rates may vary across RBI Registered Lending Entities and are typically lower than personal loans, since this is a secured loan. Rates often depend on the type of securities pledged.
Yes, most loans against securities come with flexible tenures, which can range from a few months to several years, depending on the RBI Registered Lending Entity's policy.
If the market value of your pledged securities falls, the RBI Registered Lending Entity may ask you to provide additional collateral or pay down part of the loan to maintain the LTV ratio.
Yes, you continue to receive dividends, interest, or any other benefits from your pledged securities during the loan tenure.
Repayment options may vary. You can typically repay the loan in equated monthly instalments (EMI’s) or in a bullet payment at the end of the loan tenure.
Most RBI Registered Lending Entities allow you to prepay the loan, though there may be prepayment charges depending on the RBI Registered Lending Entity’s terms.
You can apply online or visit your RBI Registered Lending Entity’s branch. You will need to provide details of your securities, KYC documents, and any other required information.
Loans against securities typically offer lower interest rates, no need to liquidate investments, and flexible repayment options available.
The primary risk is that if the value of your securities drops significantly, the RBI Registered Lending Entity may ask for additional collateral or liquidate your securities to recover the loan.