Loan against Securities
Loan against securities allows an individual to keep securities like Mutual Fund Units, Demat Shares, insurance policies of LIC and other selected companies, Saving Bonds, Gold Deposits Certificates, National Savings Certificate, Kisan Vikash Patra, etc. as collateral and borrow money . As per RBI guidelines loans against security should not exceed the limit of Rs.10 lakh if the securities are held in physical form and Rs.20 lakh per individual if the securities are held in demat form. The loan amount is generally 75-80% of the security value . Loans against mutual funds units are based on their NAV value. The loan can be used for any purpose whether it be personal or business use however one need’s to declare it while taking the loan.
Advantages of Loan Against Securities:
As the loan is generally given in the form of overdraft against securities therefore the interest is charged only on the amount that is being utilized.
One does not need to sell the shares to avail the loan thus it provides easy and instant liquidity.
Beneficial for short term funding.
Some of the features of the loans being offered by different banks:
| Name | Loan Amount | Tenure |
| ICICI Bank | Share-Minimum Rs 50,000.
Maximum Rs 20 lakh. Mutual funds-MinimumRs 50,000&Maximum Rs 20 lakh. Life Insurance Policies-Minimum Rs 50,000&Maximum Rs 5 crore. Bonds-Minimum Rs 50,000. Maximum Rs 5Crore. KVP/NSC–Minimum Rs 50,000. Maximum Rs 5 crore.
|
1 year but can be extended . |
| HDFC Bank | Min loan –Rs2 lakhs
Rs. 5 Lakhs in the case of Non-Convertible Debentures. Max.Rs 20 lakhs in case of equity shares and no max value on non equity based funds |
Not available |
| Standard Chartered bank | Max. Rs 20 lakhs in case of equity shares and it may be higher in case of other securities. | Not available |
| Religare Finvest Limited | Min.Rs 1 lac | 12 months |
| Axis Bank | 75% of the security value | Not available. |
| Bajaj Finserv Lending | 25 lakhs to Rs 10 Crore | 12 months |
| Vijaya Bank | Max. amunt Rs 10 lakh | Not available |
| Citi Bank | Upto 50% of the values of securities | Not available |
| ING Vysya Bank | Up to 85% loans against debt securities and 50% against equities.
Min. 1Lac and Max. 20L loan available to individuals against shares |
1 year but renewable facility available. |
| IndusInd Bank | Min Rs 1 lac and max.Rs 20 lacs | 12 months,may be renewed on request at bank’s discretion. |
