Loans
The blog explains how you can use your share portfolio as collateral to secure a Loan Against Shares (LAS), detailing the process, eligibility, benefits, and common questions regarding this unique borrowing option.
Imagine having a financial need and realising that you are sitting on a potential goldmine in the form of your share portfolio. Rather than selling your valuable shares, what if you could use them as collateral to secure a loan? This is the concept behind a Loan Against Shares (LAS), a financial product that allows you to leverage your investments without liquidating them. Let's address common questions you might have about this unique borrowing option.
You can get a Loan Against Shares in three minutes in three easy steps from HDFC Bank. The process is entirely online, and you don’t need to step out of your home or office to get a loan. Here’s how you can apply for a loan against shares:
To apply for the Digital Loan Against Shares, you must have the following:
The amount of LAS you can get depends on the value of the shares you pledge as collateral. It is also based on the volatility of the shares, the lender’s policies, and your creditworthiness. It’s important to note that if the share price falls significantly, you may be required to pledge additional shares or repay part of the loan.
With HDFC Bank, you can get a minimum of ₹1 lakh and up to ₹20 lakh. The loan amount can go up to 50% of the value of the shares you hold with a flat interest rate of 9.90%.
Receive the funds instantly in your account. Pay interest only on the amount utilised.
An Indian resident or non-Indian resident holding approved securities can apply for a Loan Against Securities. You must be an HDFC Bank customer if you wish to complete the transaction digitally. HDFC Bank also extends the loan to proprietors, partnership firms, private limited companies and public limited companies.
HDFC Bank offers competitive interest rates for loans against securities. The interest rates are linked to the Marginal Cost of Fund-based Lending (MCLR) rate. Check with the bank for the current rate. The great thing about this loan is that it is provided as an overdraft on your account, and you need to pay interest only on the amount of funds you use and not on the amount sanctioned.
If you are an HDFC Bank customer, you already know that the documentation is minimal, and the process is quick and hassle-free. To apply for a Loan Against Shares, you’ll need to provide proof of identity (such as a passport or driver’s license), proof of address (like a utility bill or lease agreement), and proof of income (such as salary slips or tax returns).
You’ll also need to provide shareholding statements showing the shares you intend to pledge as collateral. Some lenders may require additional documents, such as bank statements or a credit report. It is important to check with your specific lender for their exact requirements.
You can pledge a wide range of securities, including equity shares, equity and debt mutual funds, National Savings Certificates, Kisan Vikas Patras, LIC and other life insurance policies, NABARD’s Bhavishya Nirman Bonds and non-convertible debentures.
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