Loan Against Securities

Loan Against Securities

Instant Liquidity at Your Disposal


Loan Against Securities

WHAT IS LOAN AGAINST SECURITIES?

Loan Against Securities is basically a loan offered by banks as well as non-banking finance companies wherein you pledge the securities you have invested in as security against the loan amount. This loan gives benefits to the consumers to avail loan against their securities by simply pledging instead of selling them. When the customers pledge their securities, they get an overdraft facility whose overdraft limit is decided on the basis of the value of securities that are pledged. In this, the interest is charged only on the amount withdrawn by the customer. All individuals, self-employed, professionals, partnership firms, Trust, and Associations can avail loan against security. A Loan Against Securities is the best way to make your investments work stronger and smarter for you.

 

ADVANTAGES OF LOAN AGAINST SECURITIES

Some of the advantages of loan against security are given below:

  • ● You pay interest only on the actual amount used and get the advantage of a current account.
  • ● The main characteristic of loan against securities is the choice to pledge a different kind of securities, from mutual funds to life insurance plans.
  • ● This loan can be accessed anytime and anywhere.
  • ● There is an Auto-renewal facility.
  • ● There are no prepayment charges.

 

FEATURES AND BENEFITS OF LOAN AGAINST SECURITIES 

There are many benefits of loan against security and some of them are listed below:

  • ● Easy and Flexible Repayment - You just have to pay the Interest only on the amount you have utilized.
  • ● Get High-Value Loans up to 85% of security value. You get a loan against 50% of the value of approved shares and 70% of the value of mutual funds.
  • ● Ownership Benefits - You can enjoy all ownership benefits of shares and mutual funds such as bonus and dividends.
  • ● No prepayment charges – You do not have to pay any prepayment charges.
  • ● Avail of Overdraft facilities - When the customers pledge their securities, they get an overdraft facility whose overdraft limit is decided on the basis of the securities that are pledged.
  • ● Attractive Interest Rates - Interest Rate is charged only on the amount you utilize and not the entire loan. The rate of interest ranges from 10-12%.
  • ● Easy Documentation - No requirement for Financial documents to avail Loan Against Securities which make loan process hassle-free.
  • ● Wide List of Approved Securities - There is a wide list of Shares, Mutual Funds, FMPs, ESOPs, IPOs and Bonds which are accepted as securities for Loan.
  • ● The tenure of the loan against security is one year, but it can be easily renewed.

 

ELIGIBILITY CRITERIA FOR LOAN AGAINST SECURITIES

 In order to apply for the loan against security you should be :

  • ● A resident native of India.
  • ● The borrower must be between the ages of 18 – 65 years to apply for a loan against security.
  • ● A salaried or self-employed or a professional, with a source of income.
  • ● The RBI allows banks to lend up to 50% of the value of physical shares and 75% of the value of approved shares.
  • ● Shares held in the names of HUF, minors, Companies and NRI's cannot be pledged.
  • ● The loan amount cannot be used for speculative activities, any purpose linked to capital market activities, or for any anti-social purposes. 

 

DOCUMENTS REQUIRED FOR LOAN AGAINST SECURITIES

The documents required for the loan against security are mentioned below :

For Salaried:

  1. 1. PAN card.
  2. 2. Identity and address proof.
  3. 3. Photograph.
  4. 4. Last 6 months bank statement.
  5. 5. Canceled cheque.
  6. 6. Demat account statement.
  7. 7. Income proof.

 For Self Employed:

  1. 1. PAN card.
  2. 2. Identity and address proof.
  3. 3. Photograph.
  4. 4. Last 6 months bank statement.
  5. 5. Cancelled cheque.
  6. 6. Demat account statement.
  7. 7. Income proof.
  8. 8. Balance sheet and profit and loss account.
  9. 9. Office address proof and the existence of business proof.