Loans Against Securities: Eligibility, Required Document, Interest Rate

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LOAN AGAINST SECURITIES 

Loan Against Securities Details 

Loan against security is an overdraft facility that you get in return for pledging securities, such as mutual funds, bonds, shares and life insurance policies. It provides the benefits of a current account while letting you pay interest only on the amount used. Shares/ bonds/ mutual funds and life insurance policies is basically a loan wherein you pledge the securities you have interested in as collateral against the loan amount. Loan against security can be given against the following securities :

  • Insurance policies

  • Non-convertible debentures

  • NABARD Bonds

  • UTI Bonds

  • Mutual funds units

  • Demat shares

  • National Savings Certification or KVP, these are accepted in demat from only

Benefits of Loan Against Securities 

1. Widest range of collateral accepted in the industry

2. Scan based account opening

3. Overdraft facility available

4. Combines the power of loan and bank account

5. Anytime, anywhere access

6. Auto renewal of loan facility

7. No prepayment penalty (most of the cases)

8. The loan depends on the security the borrower is offering 

9. The rate of interest usually ranges from 12% to 15%. The rate varies from bank to bank. 

Fee and charges of Loan Against Securities

To apply for a loan against securities you have to pay fees and charges applied by the Bank. The following charges are taken from loan against securities i.e processing fee, prepayment / foreclosure charges etc.

TYPE 

CHARGES

Processing fee 

2% of the loan amount

Prepayment charges

NIL

Foreclosure charges

NIL 

Loan Amount 

Rs.1 lakh to Rs.20 lakh 

Tenure period

1 Year to 3 Years

Eligibility Criteria for Loan Against Securities

Before applying for a loan against securities, you should fulfil all basic eligibility criteria as prescribed by the bank. You will get your loan amount very soon if you meet all the required eligibility criteria once the documentation is done.

1. Must be an Indian Resident 

2. Should be at least 21 years of age

3. You should either be a salaried or self employed individuals

4. The security against which you are availing the loan should be approved by the bank

Documents Required for Loan Against Securities 

Any applicant who is going to avail for a loan against securities must have to submit the following documents. These documents are the requirements for the lenders who are providing you the amount of loan.

1. KYC

2. Latest statement of holding for mutual funds 

3. Pledge form for the creation of pledge 

4. Income proof = Latest salary slip showing all deductions or FORM 16 along with recent salary certificate

5. Last 2 years ITR

6. Last 6 month Bank Statement 

7. Optional - Guarantor form (Mandatory in case of joint holdings)

"Things to consider before availing loan against securities"

  • Check the eligibility criteria

  • Choose a bank which accepts varied investments as security

  • Choose a bank which offers high amount sanction on low interest

  • Repayment tenure

Compare other bank home loan interest rates 

BANKS 

INTEREST RATE 

AXIS Bank Loan Against Securities

10.50% to 12.75%

Kotak Mahindra Bank Loan Against Securities 

9.25% to 13%

ICICI Bank Loan Against Securities

8.20% to 12.50%

Standard Chartered Bank Loan Against Securities

9.50% to 12%

How to apply for Loan Against Securities

There are two ways to apply for loan against securities :

1. Online Method 

Today, almost every bank in India provides you with the option of availing loan against securities online. The whole process is fast and hassle-free. You can visit the official website of the bank from whom you wish to avail the loan and click on the ‘Apply Now’ button. You will have to enter the details required by the lender and upload the necessary documents. Once the bank has verified the details and documents submitted by you, the loan amount will be disbursed to your bank account.

2. Offline Method

You can visit the nearest branch of the lender from whom you wish to avail the loan along with the necessary documents. An official from the bank will then further assist you with the process of applying for a loan against securities scheme.

How to calculate EMI of Loan Against Securities 

The mathematical formula to calculate EMI is : 

EMI = P × r × (1 + r)n/((1 + r)n - 1) 

Where,

P= Loan amount, 

r= interest rate, 

n=tenure in number of months

Financials products offered by Bank 

 

BUSINESS LOAN

CAR LOAN

COMMERCIAL LOAN 

EDUCATION LOAN

GOLD LOAN

HOLIDAY LOAN 

HOME LOAN 

LOAN AGAINST PROPERTIES 

LOAN AGAINST SECURITIES

PERSONAL LOAN

PROFESSIONAL LOAN

TWO WHEELER LOAN

Loan Against Securities Frequently Asked Questions 

1. What is a loan against securities?

Loan against security is an overdraft facility that you get in return for pledging securities, such as mutual funds, bonds, shares and life insurance policies. It provides the benefits of a current account while letting you pay interest only on the amount used.

2. How much processing fee is charged in loans against securities?

2% of the loan amount processing fee is charged in loans against securities.

3. Which formula is applied to calculate EMI of a loan against securities?

The mathematical formula to calculate EMI is : 

EMI = P × r × (1 + r)n/((1 + r)n - 1) 

Where,

P= Loan amount, 

r= interest rate, 

n=tenure in number of months

4. How can I apply for a loan against securities?

You can download an application form from the website  and you will also visit the nearest bank branch with the form or related documents.

5. What is the minimum and maximum loan amount for loan against securities?

The minimum amount is Rs.1 lakh and maximum loan amount is Rs.20 lakh for loan against securities.

Last Updated on : 27/Aug/2020

Know More About

Loans Against Securities

You're eligible for a Loans Against Securities if you:


Are legally adult enough to handle it


Have still got it


Get a regular pay check


Make more than a basic buck

Your eligibility depends on:


Earn more than minimum income required


Maximum allowed Loans Against Securities is Rs. 10K to Rs. 45 lakhs


EMIs of other loans loweryour eligibility

Boost your eligibility by:


Pay off your credit card bills


Choose longer tenure loan up to 5 years

Nothing gets done without that paperwork (which we'll happily carry over to the bank for you, no sweat). Here's what you'll need:

  • 1. Photo ID and age proof
  • 2. Signed application form with photograph
  • 3. Residence proof
  • 4. Last 6 months bank statement
  • 5. Documentation for salaried applicants:
    • Last 3 months salary - slips
    • Form 16 or Income Tax Returns
  • 6. Documentation for self-employed applicants:
    • Last 3 years Income Tax Returns with computation of Income
    • Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account

Loans Against Securities Interest Rates

Updated on 25 Nov 2017

Loans Against Securities Details
Interest Rate (Monthly reducing balance) 10.5% - 12.75%
Processing Fees Varies with bank
Loan Tenure year to years
Pre-closure Charges Varies with bank
Guarantor Requirement Varies with bank

Loans Against Securities EMI Calculator

Loan Amount

|
1L
|
50L
|
100L
|
150L
|
2Cr

Interest Rate

%
|
5
|
10
|
12.5
|
17.5

Loan Tenure

|
1
|
10
|
20
|
25
|
0
|
120
|
240
|
300


Your Monthly Loan EMI


₹24,959