Loan Against Securities

Raise funds against holdings without selling them.

A loan against securities is an overdraft facility where approved mutual fund units, shares or bonds are pledged with the lender. The holding remains invested and continues to earn, while a credit limit is made available against it.

The permitted limit depends on the lender's approved security list and the margin applied to each category. If the pledged securities fall in value, the lender may call for additional margin or sell part of the holding.

Key features

• Pledge of mutual fund units, listed shares, bonds and insurance policies
• Holdings stay invested and continue to receive dividends and payouts
• Interest charged only on the amount actually drawn
• Limit determined by the lender's approved list and margin norms
• Margin call or partial liquidation if pledged value falls materially
• Typically faster to arrange than an unsecured facility