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Loan Against Securities Explained: Borrow Against Your Investments Easily

Author : Abhay Kumar | Published On : 26 Oct 2025

When urgent funds are needed, selling your investments might seem like the only option. But what if you could access money without giving up your valuable assets? This is where a Loan Against Securities (LAS) becomes a smart choice

Let’s break down what is Loan Against Securities & how it works, and why it might be the right choice for you.

What is Loan Against Securities?

A Loan Against Securities allows you to borrow funds by pledging your financial assets such as shares, mutual funds, bonds, or insurance policies as collateral with a bank or financial institution. Instead of selling your investments, you can secure a loan while still enjoying benefits like dividends or interest on your assets.

How Does Loan Against Securities Work?

Here’s how the process typically works:

  1. Pledge of Securities: You approach a bank or NBFC and pledge your eligible securities.
     

  2. Loan Limit Determination: The lender evaluates your portfolio and offers a loan amount based on a percentage of the current market value of the securities (usually 50%–80%).
     

  3. Loan Disbursement: The approved amount is credited to your account—often as an overdraft facility or term loan.
     

  4. Ongoing Monitoring: The lender monitors the value of your securities, and you may need to provide additional collateral if their value falls.
     

  5. Repayment: You repay the loan along with applicable interest, and once fully paid, your securities are released.

Eligible Securities for LAS

Commonly accepted securities include:

  • Equity shares
     

  • Mutual funds (debt and equity)
     

  • Bonds and debentures
     

  • Insurance policies (with surrender value)
     

  • Government securities

Key Benefits of Loan Against Securities

  • Quick Access to Funds: Faster processing compared to personal loans.
     

  • No Need to Sell Investments: You retain ownership of your assets.
     

  • Flexible Repayment Options: Overdraft and term loan facilities are available.
     

  • Lower Interest Rates: Usually lower than unsecured loans.

Things to Keep in Mind

  • If the market value of your securities falls, you may face a margin call and be required to pledge more assets or repay part of the loan.
     

  • Only listed or approved securities are accepted.
     

  • There may be processing fees and other charges involved.

Conclusion

Now that you understand what Loan Against Securities is, it’s clear that this facility can be a smart and efficient way to meet short-term financial needs without losing long-term investment benefits. It’s ideal for investors looking for liquidity without disturbing their portfolio