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Loan against securities is a kind of credit that you receive after you pledge any of your financial market assets. These assets could be the likes of your mutual funds, demat shares, government bonds or insurance policies. This means that you will not have to put up any of your other assets, such as your home, as collateral. This article will tell you everything you need to know about Loan Against Securities. Read on to know more.

How Does Loan Against Securities Work?

A loan against securities is essentially offered as an overdraft facility from a bank once you deposit shares in the demat account opened for you by them. As and when you deposit your securities into this account, you will be given instant access to funds. Note that you will only need to pay interest on the funds withdrawn by you. Typically, you get a loan repayment tenure of 1 year for such a form of credit, but it can be instantly renewed.

Top Banks Offering Loans Against Securities Interest Rates

The following table lists down some of the top lenders you can avail a loan against security from along with the applicable rates of interest and the loan amounts that can be availed:


Interest Rate

Loan Amount

Bajaj Finserv

10% p.a.

Up to ₹10 crore


6.50% p.a. to 10.30% p.a.

₹50,000 to ₹20 lakh

Tata Capital

10.50% onwards

₹5 lakh to ₹20 crore

State Bank of India (SBI)

9.75% p.a. to 11.90% p.a.

₹50,000 to ₹20 lakh

Axis Bank

10.50% p.a. to 12.75% p.a.

Up to 85% of the value of the securities pledged

Key Features of Loans Against Securities

Some of the key features of a loan availed against securities are as follows:

  • A loan against securities is a secured loan as financial instruments such as shares, mutual funds, or debentures are provided as collateral

  • The incumbency of the loan against security is 1 year and it is renewable

  • Generally, the rate of interest ranges from 10% p.a. to 15% p.a. (varies from lender to lender)

  • Generally, a processing fee of 2% of the loan amount is charged by the lender

  • The amount of the loan depends on the type and amount of the securities pledged

  • There are no additional charges in case you choose to prepay your loan

  • The loan is to be repaid in a fixed tenure of 1 to 3 years, and if the borrower is unable to repay, the lender is entitled to seize the security pledged

Eligibility Criteria for Loans Against Securities

To apply for a loan against security, you need to fulfil certain eligibility criteria:

  • You must be an Indian resident

  • You must be at least 21 years old

  • You must either be a salaried employee or a self-employed individual with a regular source of income

  • The financial institution will approve the security against which you are availing of the loan

Documents Required for Loan Against Securities

If you are a salaried employee of a private firm or a government employee, you need to furnish the following documents in order to avail a loan against securities:

  1. Identity and address proof

  2. Bank statements for the last six months

  3. Cancelled cheque of the bank

  4. Demat account status and records

  5. Income proof

  6. Photograph

If you are self-employed, then you are required to submit the following documents to the lender:

  1. Identity and address proof

  2. Bank statements for the last six months

  3. Cancelled cheque of the bank

  4. Demat account status and records

  5. Income proof

  6. Balance sheet and profit & loss account

  7. Office address and business proof

  8. Photograph

Things to Consider Before Availing a Loan Against Securities

Before you avail of a loan against securities, there are certain things you need to take into consideration:

  • You should ensure that you fulfil all the eligibility criteria before applying for the loan.

  • You must ensure that the financial institution accepts the type of security that you are willing to pledge for the loan such as mutual funds, shares, insurance policies, etc.

  • You should select a financial institution that sanctions a high amount of loan against the collateral at low interest and with less processing fee.

  • You should select a financial institution that provides the most flexible repayment tenure. Typically, the tenure varies from 1 to 3 years, however, it also depends on the loan amount availed.

  • You must maintain a good credit score and a solid repayment history so that the lender offers you the loan at an affordable interest rate and favourable terms.

A loan against securities is one of the best ways to ensure financial assistance when you are in an urgent need of funds without having to lose any of your assets. If you're not eligible for a loan against securities, you can opt for a Personal Loan available on Bajaj MARKETS. The Personal Loan can be availed through an easy application process. You can also reap the benefits of competitive interest rates and lower processing fees if you choose to apply via Bajaj MARKETS.

How to Apply for Loan Against Securities

You can apply for a loan against securities either online or offline. For an online application, just visit the official website of your preferred lender and enter some basic details like the amount of loan required and the type and amount of securities to be pledged along with KYC details like your Aadhaar number and PAN. The application process is seamless and hassle-free for most lenders.

If you wish to apply for the loan offline, just visit the nearest branch of a lender of your choice along with the requisite documents. An official from the bank/NBFC would assist you in the further process of the loan application.

FAQs on Loan Against Securities

  • ✔️Is a loan against securities a good idea?

    If you are in urgent need of cash and do not wish to sell off your assets, availing a loan from a bank/NBFC by pledging your assets as security can definitely be a good idea. However, you must make sure that you repay the loan on time, as otherwise, the lender has full right to seize the security pledged by you.

  • ✔️Can I get a loan against my stock portfolio?

    Yes, you can get a loan by pledging the stocks owned by you as a security with a bank/NBFC.

  • ✔️Can I foreclose my loan against securities?

    Most lenders would allow you to foreclose the loan they granted you against the securities pledged by you. However, a foreclosure fee might be applicable which varies from lender to lender.

  • ✔️Should my securities be in the Demat form?

    Yes, your securities need to be in Demat (dematerialised) form. However, some lenders also allow you to pledge your securities held in depositories such as NSDL or CDSL.

  • ✔️How frequently will my portfolio be reviewed?

    Most lenders review your portfolio on almost a daily basis.