Loans against shares/securities are monetary loans that are provided against listed securities like bonds, shares, insurance policies or bonds. These loans are very useful in times when cash is needed urgently for any personal or business requirement. Loans against shares are a popular form of getting short or long term loans and the repayment period extends to up to 36 months. The list of securities against which one can get a loan will differ from lender to lender and loan amount can go up to Rs.20 lakh.
Loan against share is offered against listed securities. Investors can borrow funds against existing investment portfolios to meet investment and liquidity requirements. The money that the borrower has invested in can get him a loan. Most often people invest in shared as it is a popular method of short and long term investment. The securities acceptable differ from lender to lender and the lenders usually have a list of securities that they choose from. It is simply to ensure that the lender will not incur loss.
Loan against shares is offered to:
The features of loan against shares are as follows:
The Stock Exchange Securities includes:
Stockholder gets a certificated that indicated the amount of loan held by him. The certificates issued can’t be endorsed. The title of the stock passes on to the new holder after completing transfer registration to the new holder. Lenders offer loans against such certificates.
This is a promise made by the President of India (Central Government) or by Governor of State to pay the specified amount to the holder of the note or to whoever it is endorsed to. This is a negotiable instruments and the title can be passed on by endorsement and delivery.
This certificate states that the bearer is entitled to the amount on a specific date. These bonds possess ownership and the title can be transferred by delivering the document.
Corporate securities include equity shares, preference shares and creditorship securities.
Debentures is a document issued by a company as an evidence of debt. This certificate carries a predetermined rate of interest which is payable at regular intervals. The principal amount is to be paid at maturity of the certificate.
To offer shares as security is best option as:
Following banks offer loan against shares in India:
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