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Usually a current account is opened in the borrower’s name and the rate of interest is calculated on the amount that is withdrawn by you during the period of utilisation.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.
| Lender's Name | Interest Rate | Loan Amount | Tenure |
|---|---|---|---|
| HDFC Bank | At the discretion of the bank | Rs.50,000 onwards | Depends on the loan amount |
| Bajaj Finserv | 9.50% to 12.00% p.a. | Up to Rs.10 crore | Depends on the loan amount and rate of interest |
| Tata Capital | 10.50% onwards | Rs.50,000 to Rs.20 lakh | 1 year with an auto renewable feature |
| State Bank of India (SBI) | On the basis of the selected scheme | Rs.20,000 to Rs.5 crore (Based on the selected scheme) | Depends on the loan amount and rate of interest |
| Axis Bank | 10.50% to 12.75% p.a. | Up to 85% of the value of securities | Depends on the loan amount and rate of interest |
Benefits and features of availing HDFC Bank Loan against Securities:
Penal charges:
A penal charge of 18% p.a. plus tax will be levied on the amount drawn in the excess of the limit applicable.
Penal charges:
A penal charge of 6% plus other applicable rates will be levied on the amount drawn in the excess of the limit applicable.
Benefits and features of using TATA Capital Loan against Securities
Penal charges:
A penal charge of 3% plus outstanding amount per month + GST will be levied on the amount drawn in the excess of the limit applicable.
Benefits and features of availing SBI Loan against Securities:
Penal charges:
A penal charge will be charged at the discretion of the bank and will vary from scheme to scheme.
Benefits and features of availing Axis Bank Loan against Securities:
Penal charges:
A penal charge of 2% per month will be charged.
Given below are some of the eligibility criteria you will be required to fulfill in order to be eligible to avail loan against securities from a bank:
Borrower who is salaried must submit the following documents:
Borrower who is self- employed must submit the following documents:
Online
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.
Offline
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.
Most of the banks in India provides you the option of foreclosing your loan against securities account after the payment of the loan amount including the interest. A foreclosure charge will however be applied. However, the option of foreclosing your loan against security may differ from bank to bank.
Yes, the lender will inform you about the latest limit by sending an e-statement to your bank account.
Yes, your securities should be in the demat form. In case you cannot pledge your securities in the demat form, there are banks in India who offer you the option of pleding your securities held with any Depository Participant in NSDL or CDSL.
Yes, you can avail loan against security by converting your physical securities into a dematerialised form by opening a depository account with the lender.
The majority of the lenders in India review your portfolio on a daily basis. However, an interim revaluation might be required.
A GST rate of 18% will be applicable on banking services and products from 01 July, 2017.
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