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The primary function of a financial constitution is to lend money. The money is lent in different forms and is mostly for a certain period. Deposits that a customer makes to the financial institute is repayable on demand and hence the bank or the financial institute can’t keep the funds locked up for a longer term. This is the reason why loans are usually granted against collateral security and only sometimes against personal security of the borrower.
Loan against security is a loan advance to a customer against a pledge of security. It can be loan against insurance policy, mutual funds, National Savings Certificate and other securities. Loan against security can be given against the following securities:
Loan against property helps you to avail timely finance instead of selling off the securities in a haste. The limit of the financial assistance depends on the security that you have pledged. Usually a current account is opened in the borrower’s name and the rate of interest is calculated on the amount that is withdrawn by you during the period of utilisation.
When you pledge a security, you get steady cash easily at the time you need it the most and this also means that you won’t have to sell your shares and not benefit from the bonus and dividends.
Following are the salient features of loan against security:
Borrower who is salaried must submit the following documents:
Borrower who is self- employed must submit the following documents:
Following are the leading banks in India that offer loan against security: