Leverage Your Portfolio : Everything You Need to Know About Loans Against Securities
Ever faced a situation where you needed immediate liquidity but didn’t want to part with your prized investments? Imagine leveraging your securities—shares, bonds, or mutual funds—to access funds without selling them. This is the power of a Loan Against Securities (LAS).
Whether it’s funding a new business opportunity, meeting personal obligations, or managing unforeseen expenses, Loans Against Securities provide an efficient financial solution. It’s a strategic tool tailored for investors who understand the value of retaining their investments while capitalising on liquidity.
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What is a Loan Against Securities?
A Loan Against Securities allows you to pledge your financial assets—like shares, mutual funds, bonds, or Sovereign Gold Bonds (SGBs)—as collateral to secure funds. While these assets are temporarily pledged, you continue to enjoy their benefits, such as dividends, interest, or capital appreciation.
Here’s how it works:
- You pledge your eligible securities with a lender.
- The lender evaluates the market value of your portfolio and assigns a Loan-to-Value (LTV) ratio.
- Based on the LTV, you receive a sanctioned credit limit.
And the best part? You retain ownership of your portfolio while accessing the liquidity you need.
Why Does a Loan Against Securities Matter for Investors?
For affluent clients, liquidity challenges often arise not from a lack of assets but from the need to avoid liquidating them prematurely. A Loan Against Securities bridges this gap by allowing you to:
- Capitalise on Opportunities: Use funds for business expansions or lucrative investments without touching your portfolio.
- Avoid Tax Implications: Keep your assets intact and defer capital gains tax.
- Retain Returns: Your pledged assets continue to earn dividends and capital appreciation.
Quick Benefits at a Glance
- Flexible repayment options
- Low loan against security interest rate, making it cost-effective.
- Continued ownership of securities.
- Customisable solutions tailored to your financial needs.
Ready to explore more? Let’s delve deeper.
How Loans Against Securities Work
When you pledge securities under LAS, the market value of your investments determines your credit limit. The financial institution evaluates your portfolio, assigns a Loan-to-Value (LTV) ratio, and extends a credit limit accordingly. Think of it as unlocking the liquidity tied up in your assets while continuing to benefit from market upswings.
Here’s a quick example:
If you pledge shares worth ₹10 crores, and the lender offers an LTV of 50%, you can access up to ₹5 crores as a loan. Your shares remain yours, but they’re temporarily pledged as collateral.
This flexibility makes Loans Against Securities a preferred choice for managing liquidity with precision.
Here’s a closer look at how Loans Against Securities work:
Pledging Securities: You pledge eligible assets such as shares, bonds, or mutual funds.
Credit Limit Assessment: The lender evaluates your portfolio and assigns a credit limit based on its value and type.
Loan-to-Value (LTV) Ratio: Typically, lenders offer an LTV of 50-80%, depending on the asset class.
Accessing Funds: Once approved, you can draw funds as needed.
Repayment Options: You can choose from flexible repayment structures:
- Interest-Only Payments: Pay only the interest during the tenure and settle the principal at the end.
- Overdraft Facility: Withdraw funds as needed and pay interest only on the utilised amount.
Types of Securities You Can Pledge for Loans Against Securities
When it comes to Loans Against Securities, not all assets are created equal.
One of the key advantages of a loan against securities is the flexibility it offers in terms of the assets you can pledge. Whether you hold equities, bonds, or even mutual funds, various types of securities can serve as collateral for securing a loan. Understanding which securities are eligible—and how their value impacts your loan amount—can help you make informed decisions. By pledging the right assets, you can unlock liquidity without having to liquidate your investments, all while benefiting from competitive loan against security interest rates.
Here’s a list of securities commonly accepted for Loans Against Securities:
- Shares: Equity shares listed on major stock exchanges.
- Mutual Funds: Units of mutual funds, particularly debt and equity funds.
- Bonds: Corporate bonds, government securities, and debentures.
- Sovereign Gold Bonds (SGBs): A secure option with high collateral value.
Lenders evaluate securities based on factors like:
- Market Liquidity: Highly liquid securities are preferred.
- Creditworthiness: Bonds or funds from top-rated institutions carry higher LTVs.
- Market Trends: Volatile markets may lead to conservative LTV ratios.
For example, equity shares typically receive an LTV of 50%, while debt mutual funds or bonds can go up to 70-80%.
Market fluctuations directly impact the value of pledged securities. A bull market might boost your collateral value, increasing your credit limit, while a bearish trend could lead to margin calls. This makes diversification critical for mitigating risks.
Pro Tip: The value of these securities fluctuates with market conditions. Opting for a diversified portfolio as collateral can mitigate the risks of market volatility affecting your credit limit.
Features of Loans Against Securities
A loan against securities is more than just a financial tool—it’s a seamless, efficient solution designed for investors who value convenience and control. From flexible repayment options to personalised loan-to-value (LTV) ratios, its features are crafted to suit your portfolio’s uniqueness. With attractive loan against security interest rates, this financing option ensures that you can maximise liquidity while safeguarding your investments’ integrity.
Loans Against Securities come packed with features designed for investors who value agility and control:
- Flexible Repayments
- Rate of Interest as low as 9%
- Ownership Retention: Even while pledged, your securities continue to yield dividends and returns.
- Lowest processing charges
- Pay interest only on the loan amount utilised and not on the approved amount.
- Choose the securities you wish to pledge or change them in future
- No additional charges on prepayments
- Easy and Convenient Documentation
- Designated Relationship Manager.
- Exhaustive list of up to 800+ approved securities for Loans Against Securities.
- Multiple lender options
- Facility to fund and avail large size loans.
For someone deeply entrenched in the world of finance, these features aren’t just conveniences—they’re strategic advantages.
Benefits of Loans Against Securities
When it comes to unlocking the potential of your portfolio, a loan against securities offers a unique blend of liquidity and financial flexibility. This solution ensures that your investments continue to grow while you access the funds you need, whether for personal aspirations, business opportunities, or emergency expenses. Coupled with competitive loan against security interest rates, it’s a tailored approach to meet your goals without disrupting your long-term financial plans.
Let’s get to the heart of why a loan against securities is a game-changer:
- Loans Against Securities allow you to borrow funds and retain portfolio/ investments and fulfill immediate/short-term requirements at the same time
- Lowest rate of interest as compared to unsecured loans and credit cards
- No hassle of EMIs, only interest needs to be serviced unlike the unsecured loans
- Interest is computed only on the utilised amount of approved loan (pay as per use)
- No prepayment fees or foreclosure charges
- Accessing funds without liquidating your investments means you stay invested for the long haul, letting compounding do its magic
- With lower interest rates than most personal or business loans, Loans Against Securities keep your borrowing costs manageable.
- If applicable, interest paid on loan against securities may be deductible for certain purposes (consult your tax advisor for clarity).
- Loan Against Securities offers the customisation you deserve—be it tailored loan amounts, repayment schedules, or even curated securities as collateral
- By using dividends or returns from your pledged securities to cover interest payments, you can further reduce the financial burden of the loan.
Risks and Considerations
While loans against securities (LAS) offer unparalleled flexibility, it’s essential to be aware of potential risks and considerations. As seasoned investors, it’s important to understand that every financial decision comes with trade-offs. The key to making the most of this option is being aware of the nuances that could impact your financial stability. From market fluctuations affecting the loan-to-value (LTV) ratio to the potential for margin calls, understanding these risks ensures that you can navigate the process confidently and strategically.
Here’s what you should watch out for:
Market Volatility: A Double-Edged Sword
The value of pledged securities isn’t static—it fluctuates with market conditions. A bull market can amplify your portfolio value, increasing your credit limit. However, in a bearish trend, the opposite holds true, potentially leading to margin calls.
For example:
- If you pledge shares worth ₹1 crore with an LTV ratio of 50%, you secure ₹50 lakhs.
- A 20% market dip reduces your portfolio to ₹80 lakhs, impacting your collateral coverage.
Margin Calls: What Triggers Them and Why They Matter
A margin call occurs when your collateral’s value drops below the lender’s required margin. To restore the balance, you might need to:
- Deposit additional securities.
- Pay down a portion of the loan.
Failing to meet a margin call could result in the lender selling your securities to recover the loan, potentially leading to financial and emotional distress.
Overleveraging: A Word of Caution
It’s tempting to maximise your borrowing capacity, especially during lucrative market opportunities. But overleveraging can backfire if repayment becomes a challenge. Always assess your repayment capacity and avoid stretching your finances too thin.
Interest Rates: The Fine Print Matters
While LAS typically offers a competitive loan against security interest rate, several factors can influence this:
- Type of securities pledged: High-liquidity assets may secure lower rates.
- Loan tenure: Shorter tenures often mean better rates.
- Market conditions: Interest rates can fluctuate based on economic factors.
Here’s what you can do to mitigate risks
- Diversify your portfolio to reduce dependency on any single asset.
- Opt for conservative borrowing, well within your repayment capacity.
- Monitor your portfolio regularly and stay proactive in managing margin calls.
How Loan Against Securities Are A Great Way To Earn Money
Consumers can utilise their securities to avail of required funds for personal or business purposes. They need to pledge their investments in favour of the lending institution.
A loan against shares is a secured loan against your financial securities. There is a long list of 800+ approved securities for loan approval. The loan against security can be availed as an overdraft facility. You can utilise the funds as and when required.
You need not bear any loss due to the sudden selling of your investments. During the entire loan term, you will continue to earn on their pledged securities, like interest, dividends, bonuses etc. Therefore, a loan against securities is considered a viable option during a financial trouble for long-term investors.
You need not bear any loss due to sudden selling of your securities or investment units. Just apply for a loan and keep earning.
Our clients can foreclose these loans anytime. A part-payment facility can also be availed. Rurash does not charge a fee for foreclosure or part payments.
- RURASH brings to you Quick and Secured Financing from Rs 10 lacs to 100 Crores.
- Pledge your equity shares, mutual fund investments, FMP, insurance or bonds and get access to instant funding with low interest rates. We facilitate convenient and hassle-free financing through a simple online application and instant processing.
- One of our loan officers will work with you to complete the application, process the loan and disburse funds
Loans Against Securities vs. Other Financing Options
When considering liquidity solutions, it’s essential to evaluate how different financing options align with your needs. A loan against securities stands out as a distinctive choice, offering flexibility, cost-efficiency, and the ability to retain ownership of your investments. Unlike traditional loans, this option lets your portfolio work for you even as you borrow. By comparing features such as repayment terms, collateral requirements, and loan against security interest rates, you can identify why LAS might be the smarter choice for strategic financial planning.
Not sure if a Loan Against Securities is the right choice? Here’s how it stacks up against other popular financing options:
Feature | Loan Against Securities | Personal Loans | Credit Cards | Home Loans/Other Secured Loans |
Interest Rate | Low | Higher than LAS | Very High | Competitive |
Repayment Flexibility | High | Limited | Limited | Limited |
Collateral Required | Yes | No | No | Yes |
Processing Time | Fast | Moderate | Instant | Lengthy |
Purpose | Flexible | General personal expenses | Small expenses | Home or large assets |
Impact on Portfolio | Retain securities | Not Applicable | Not Applicable | Not Applicable |
Why a Loan Against Securities is Ideal
A Loan Against Securities stands out for affluent individuals and businesses because it aligns with their unique financial needs:
- Large-Ticket Purchases: Need funds for a dream vacation or a luxury car? Loans Against Securities offer quick liquidity.
- Funding Investments: Use Loans Against Securities to capitalise on new investment opportunities without liquidating existing assets.
- Tax Efficiency: Defer capital gains taxes by retaining your portfolio.
For affluent individuals and businesses, a Loan Against Securities is less about borrowing and more about leveraging financial intelligence.
Eligibility Criteria for Loans Against Securities
Securing a loan against securities is a straightforward process, but it’s essential to meet certain eligibility criteria to ensure smooth approval. From the type and value of your securities to basic documentation requirements, lenders assess various factors to tailor the loan to your financial profile. Understanding these criteria not only simplifies the process but also gives you clarity on how to maximise the benefits, including access to competitive loan against security interest rates. Whether you’re an individual investor, an HNI, or a business, these guidelines are designed to align with your financial capabilities and goals.
Who Can Apply?
Loans Against Securities are tailored for:
- Individual Investors: Especially HNIs and ultra HNIs with diverse portfolios.
- Businesses: Looking to meet working capital needs or fund expansions.
Minimum Security Value
Lenders often set thresholds to ensure substantial collateral. Typically:
- Shares/Mutual Funds: Minimum portfolio value of ₹10 lakhs.
- Bonds/SGBs: Varies based on asset class.
Documentation Required
Applying for Loans Against Securities is straightforward, but accuracy and thoroughness in documentation can expedite approval:
- Photo Identity Proof
- Address Proof
- Bank Statements
- Securities Proof
- 2 Passport size Photographs
- Security Cheques
- Statement of Holding
Additional Tips for a Seamless Application
- Ensure your securities are not already pledged.
- Provide accurate portfolio valuations to avoid discrepancies.
- Clarify the loan against securities interest rate and repayment terms with your lender.
By meeting these criteria, you’ll be well on your way to accessing the liquidity you need without compromising on your investments.
Applying for a Loan Against Securities
Applying for a loan against securities should be as seamless as leveraging your investments. The process is designed to be efficient and straightforward, ensuring you can access liquidity without unnecessary hurdles. From evaluating your securities to disbursing the loan, every step is crafted to prioritise transparency and convenience. With competitive loan against security interest rates and our team to guide you through the process, the journey is tailored to suit the fast-paced financial lives of investors and businesses.
A Step-by-Step Guide to Getting Started
1. Security Evaluation
Begin by identifying the securities you wish to pledge—be it shares, mutual funds, bonds, or SGBs. Our experts evaluate their market value and risk profile to determine eligibility.
2. Loan Offer and Terms Discussion
Based on the security evaluation, we propose a tailored loan amount and discuss terms, including the loan against security interest rate and repayment flexibility. This stage ensures clarity and transparency for informed decision-making.
Documentation Submission
Once you’re satisfied with the offer, submit the necessary documentation:
- KYC documents (PAN Card, Aadhaar, etc.).
- Portfolio statements.
- Any additional details required for your securities.
4. Approval and Disbursal
Post verification, we expedite the approval process. Most loans are disbursed within 48-72 hours, ensuring you get timely access to funds without disrupting your financial plans.
With our team at work, you can rest assured that liquidity is always within reach.
Why Choose Us for Your Loans Against Securities Needs?
When it comes to navigating the complexities of loans against securities, you need a partner who not only understands your needs but anticipates them. At RURASH Financials, we go beyond just providing a service—we deliver an experience tailored to your financial journey. Here’s why we’re the trusted choice for affluent individuals and businesses.
Expertise Backed by Experience
With decades of experience in the financial industry, we’ve set benchmarks in the Loans Against Securities space. Catering to a clientele that values discretion, precision, and expertise, we’ve honed our solutions to reflect the needs of sophisticated investors.
We don’t just stay ahead of the curve; we help you lead it. Our in-depth knowledge of securities, market trends, and financing ensures that you’re always equipped with the best tools to achieve your goals.
Bespoke Financial Solutions
One size never fits all—especially in the world of high-value investments. That’s why we offer personalised Loan Against Securities options that align with your unique portfolio and financial aspirations. Whether you’re leveraging securities for a business expansion, funding a lifestyle upgrade, or seizing a time-sensitive investment opportunity, we ensure that your loan works for you, not the other way around.
Our advisors take the time to understand your requirements, crafting solutions that maximise value while minimising risks.
Expertise That Works for You
Making the right financial moves requires more than just options—it requires insights. That’s where our seasoned experts come in. From choosing the right securities to understanding the nuances of the loan against security interest rate, our team provides clear, actionable advice.
Think of us as your financial ally—guiding, not just servicing. With our support, you can make decisions that preserve your wealth, enhance your liquidity, and create new opportunities for growth.
Competitive Loan Terms
Your investments deserve the best terms, and that’s exactly what we offer. Our loan against security interest rate is designed to be competitive, ensuring that you access liquidity without high borrowing costs.
And because we work with a wide variety of securities—shares, mutual funds, bonds, and more—we offer the flexibility to structure a loan that aligns with your preferences and risk appetite.
A Partner You Can Trust
At the heart of our Loan Against Securities offerings is a commitment to trust. Our clientele isn’t just a list of transactions—it’s a community of achievers, dreamers, and visionaries. We take immense pride in being part of your success story, offering services that stand the test of time.
Tailored for Individuals and Businesses
Your financial needs are unique, and our services are built with that in mind. Whether you’re a high-net-worth individual seeking to enhance liquidity or a business owner accessing capital to fund growth, our loan against securities solutions are tailor-made to suit you.
Dedicated Relationship Manager
Questions? Concerns? Our team is always on hand to provide clarity and resolve issues promptly. With us by your side, you’re never alone in your financial journey.
At RURASH Financials, we’re not just a provider; we’re your financial partner—committed to making your investments work harder for you.
Take the First Step Today
In the dynamic world of wealth management, liquidity plays a crucial role in seizing opportunities. A loan against securities empowers you to access funds while keeping your investments intact, making it a powerful tool for wealth creation and financial flexibility.
With our expertise, personalised solutions, and commitment to excellence, we’re more than a service provider—we’re your trusted partner in financial growth.
Ready to experience the true potential of your investments? We’re here to make it happen.
Our experts are just a call or click away, ready to assist you in securing a loan against securities tailored to your financial ambitions.
Let’s help you turn your investment portfolio into a springboard for success. Reach out today to explore the possibilities!
Frequently Asked Questions (FAQs)
You can pledge various types of securities, including shares, bonds, mutual funds, sovereign gold bonds (SGBs), and other approved assets. Each type of security offers different Loan-to-Value (LTV) ratios, which can impact the loan amount you can receive.
The loan amount is typically calculated based on the Loan-to-Value (LTV) ratio of the securities you pledge. This ratio depends on the type of securities, their market value, and the prevailing market conditions.
Yes, securities held jointly or individually can be pledged, but the eligibility criteria may vary based on the ownership structure. You’ll need to provide the necessary documentation proving ownership.
Market fluctuations can impact the value of your pledged securities, potentially leading to a margin call if the value falls below a certain threshold. It’s important to regularly monitor the performance of your portfolio to avoid such situations.
If the value of your pledged securities falls, you may be required to pledge additional securities or make a partial repayment to maintain the required LTV ratio. Failing to do so could trigger a margin call.
Yes, you can use the funds from a loan against securities for various purposes, including personal needs, investments, or business expansion, without having to sell your existing assets.
Repayment schedules can vary, but typically, you may have the option to make interest-only payments during the loan term with a lump-sum repayment at the end, or you can opt for regular installment payments. Discuss your preferred repayment structure with our team at RURASH Financials.
Loan against security interest rates are typically lower than unsecured loans like personal loans or credit cards. However, they may vary depending on the type of securities pledged and the market conditions.
Many financial institutions, including RURASH Financials, offer the option for prepayment or foreclosure without penalties, but you should always confirm the terms beforehand.
Yes, NRIs can also apply for a loan against securities, provided they meet the eligibility criteria and submit the necessary documentation as per Indian financial regulations.
There is no lock-in period for the securities, but they must remain pledged for the duration of the loan tenure. You cannot sell or transfer the pledged securities without settling the loan.
Yes, depending on your circumstances, RURASH Financials may offer an option to extend the loan tenure. This will be subject to the terms and conditions set at the time of the loan agreement.
Client Testimonials
I am loving the investments and yields on alternative investment products recommended by Rurash Financials. Something which was earlier a thing for the ultra-rich, is now accessible to passionate investors like me.” Thank you Ranjit Jha, for opening this world of new opportunities.
M. Shah, Nairobi - Kenya
❤
Their suggestions were high on risk-return balance. Love the fact that team Rurash will help and coach the investors to take informed investment decisions backed through analytics and easy to comprehend documentation. Kudos to the straightforward, simple and clear process of investing.
Nayantara Hari, Mumbai
❤
Frequently Asked Questions about SEBI Registered AIFs
A SEBI registered AIF is an alternative investment fund authorised by the Securities and Exchange Board of India (SEBI) to ensure it meets regulatory standards. This registration provides investors with a secure, regulated environment for accessing unique and diversified investment options.
Yes, SEBI has outlined specific compliance requirements for each AIF category to suit their distinct investment strategies and risk profiles. These tailored regulations help protect investors while ensuring transparency within each category.
Investors in SEBI registered AIFs receive regular updates and performance reports from fund managers, as mandated by SEBI. Additionally, SEBI’s reporting requirements allow investors to track their investment’s performance and compliance standards closely.
SEBI monitors the performance of SEBI registered AIFs through mandatory quarterly and annual reports submitted by fund managers. These detail performance, strategy, and portfolio updates. SEBI also conducts periodic audits to ensure compliance with regulatory standards and risk management practices.
Investing in SEBI registered AIFs offers regulatory oversight, ensuring transparency and accountability. These funds provide high potential returns, diversification into alternative assets, and professional management of investments.
Yes, SEBI maintains an updated list of SEBI registered AIFs on its website, categorising them based on their investment strategies and fund managers. This list helps investors verify the authenticity of any AIF they are considering for investment.
You can verify if an AIF is SEBI registered by checking the official SEBI website, where a regularly updated list of SEBI registered AIFs is available. Alternatively, you can directly contact SEBI or ask the fund manager for proof of registration.
While SEBI registered AIFs are regulated, they still carry risks such as liquidity issues due to lock-in periods. Market volatility is also a concern, especially in high-risk strategies like Category III AIFs. Additionally, changes in government regulations can affect fund performance.
Taxation on SEBI registered AIFs depends on the fund’s category, with Category I and II funds enjoying pass-through taxation, while Category III funds are taxed at the fund level. It’s essential for investors to consult tax experts to identify their tax liabilities.