What is Loan Against Securities?

In an age where liquidity needs can arise at any moment from funding a child’s education to meeting a medical emergency or seizing a business opportunity, we often face a dilemma: should I break my investments or borrow?

A Loan Against Securities gives you a third option: a secured loan that allows you to borrow money by pledging financial assets such as mutual funds, shares, bonds, or life insurance policies.
Unlike selling your investments, LAS helps you retain ownership, ensuring that your long-term wealth-building remains intact even as you access liquidity.

For example, if you have mutual funds worth ₹10 lakh, you could pledge them and get a loan of ₹5–6 lakh within hours — without selling or redeeming them.

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Types of Assets Eligible for LAS

1. Mutual Funds: Both debt and equity schemes held in demat form or through MF Central.
2. Shares: Listed equity shares held with NSDL/CDSL.
3. Life Insurance Policies: Especially traditional or ULIP plans with surrender value (loan against policy).
4. Bonds & Government Securities: Select lenders also accept high-grade debt instruments.

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How Does LAS Work?

The concept is simple: your investments act as security for a loan. The lender offers you a percentage of their value as credit  known as the Loan-to-Value (LTV) ratio.
Typical LTVs are:

• 50–60% for mutual funds
• 40–50% for shares
• 80–90% of surrender value for life insurance policies

During the loan period, your investments remain in your name and continue to earn dividends, bonuses, or NAV appreciation. Once the loan is repaid, the pledged securities are released instantly.

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Benefits of Taking a Loan Against Securities

• Retain Ownership: You don’t have to sell or break your investments.
• Faster Access to Funds: Digital platforms like SLiQ enable same-day or next-day disbursals.
• Lower Interest Rates: Secured nature of the loan means better pricing than unsecured loans.
• Flexible Repayment: You can prepay, top-up, or partially withdraw as per your convenience.
• No Credit Score Dependency: Since it’s backed by collateral, LAS is less reliant on traditional credit checks.
• Continued Wealth Growth: Your pledged assets remain invested and can still earn dividends, bonuses, or NAV growth.

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How to Take a Loan Against Securities

Here’s a step-by-step guide to help you understand how to take LAS through a modern digital platform like SLiQ:

1. Check Eligibility and Choose the Asset

Start by identifying which of your assets:  mutual funds, shares, or life insurance policies are eligible. Most platforms allow you to check this by logging in using your PAN, NSDL/CDSL credentials, or policy details.

2. Get Instant Loan Estimate

The system evaluates your holdings and gives you an instant view of how much loan you can get based on current market values and applicable LTV ratios.

3. Pledge Your Assets Digitally

Once you select the securities, the platform initiates an e-pledge request through NSDL/CDSL (for shares/MFs) or the insurer (for policies). You verify it via OTP or eSign — no paperwork or physical visits.

4. Loan Processing and Disbursal

After pledge confirmation, the lender processes the loan and credits the amount directly to your bank account, often on the same day.

5. Repayment and Unpledge

You can repay at any time partially or fully. Upon repayment, the pledge is released, and your assets are restored to normal status. Many platforms allow auto-top-ups and flexible interest payments as well.

‍Tip: Use LAS primarily for short- to medium-term liquidity needs and ensure that pledged assets have stable value to avoid margin calls.

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Risks and Things to Keep in Mind

• Market Volatility: If the value of pledged securities drops, lenders may ask for a top-up or part repayment.
  
• Interest Costs: Use LAS responsibly to avoid paying prolonged interest on short-term needs.
  
• Insurance Policy Loans: For life insurance, unpaid loans can reduce death or maturity benefits, so plan repayment carefully.

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Summary

A Loan Against Securities is more than a borrowing tool,  it’s a strategic way to make your assets work harder.
Instead of choosing between selling investments or delaying needs, LAS gives you a third option: access liquidity while staying invested.

With platforms like SLiQ by ValuEnable, taking LAS is now as simple as logging in, pledging digitally, and receiving funds, all within a few hours.

So, the next time life throws an unexpected expense your way, remember:
Your investments can do more than just grow - they can empower.

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