What Is Loan Against Securities And How To Get It?

6 min read | Updated on September 02, 2025, 15:24 IST

About Upstox

Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.

The first thought many people have in the face of financial adversity is to liquidate their investments and use the proceeds to address the problem they are facing. And why not? Is that not the exact reason one saves? To have a financial cushion to fall on. The only downside of this is that once done, you have to start from scratch again and build a new financial net. What if you face another adversity before your net is ready? So, does that mean you should not use your savings even when you are in dire need? Well, no, the trick is to use it while still maintaining it.

What Is A Loan Against Securities (LAS)?

A Loan Against Securities (LAS) is a type of secured loan in which you pledge your financial assets as collateral. It usually includes securities such as shares, mutual funds, or bonds. To access funds, you do not have to sell them. This facility offers liquidity while allowing you to retain ownership of your investments.

Key Features:

As you still own the securities, you continue to earn dividends or interest on the securities that are pledged.
Funds are usually offered as an overdraft or a line of credit.
Interest is charged only on the amount utilised, not the entire sanctioned limit.
Quick processing with minimal documentation.
There is no need to break long-term investments during emergencies.
Loan-to-Value (LTV) ratio is generally capped at 50–65%.
Margin calls may be raised if the market value drops.

Common Securities Accepted by Major Institutions

Security Type	Accepted by Banks	Accepted by NBFCs
Equity Shares	Yes	Yes
Mutual Funds	Yes	Yes
Bonds & Debentures	Yes	Yes
Insurance Policies	No	Maybe (selectively)

How Does It Work?

Obtaining a Loan Against Securities is a straightforward and expedited process, often completed online with minimal paperwork. The loan is provided by pledging your financial assets, and funds are made available almost instantly.

When you pledge your securities, the lender temporarily holds them as collateral. In return, you receive access to a line of credit or overdraft account. The loan limit is determined by the market value of the pledged securities, and you are charged interest only on the amount actually used.

Key Highlights

The loan is sanctioned as a percentage of the current market value
Your limit may be reduced if the value of securities drops
You pay interest only on the amount withdrawn, not the total limit

To help you better understand, here’s a breakdown of how the process works:

Choose A Lender

Select a bank, NBFC, or broker that offers LAS and accepts your type of securities.

Submit Application

Apply online or offline with KYC documents and details of your holdings.

Pledge Securities

Your investments are pledged digitally via your Demat or mutual fund account.

Loan Limit Is Approved

Based on current market value, a credit limit is set and linked to your overdraft account.

Use And Repay As Needed

Withdraw funds as required. Pay interest only on the amount utilised, not the total limit.

Benefits Of Taking A Loan Against Securities

Using a Loan Against Securities (LAS) offers several advantages, particularly when you need funds without compromising your long-term investments. Here are the critical benefits:

Benefit	Explanation
Quick Processing and Instant Liquidity	Most lenders offer fast approval and disbursement, often within 24 hours, making it ideal for emergency or short-term financial needs.
No Need to Sell Your Investments	You retain ownership of your securities and continue earning dividends or interest, even while they’re pledged.
Lower Interest Rates Than Personal Loans	Being a secured loan, LAS usually attracts lower interest rates compared to unsecured personal loans (the difference can be up to 6-10% per annum).
Easy Online Management	Most platforms offer complete digital control—apply, pledge, withdraw, and repay—all through a user-friendly online interface, especially with brokers like Upstox.
Interest Only on Amount Used	You pay interest only on the funds you actually withdraw, not the total sanctioned limit.

Top 5 Things To Keep In Mind While Applying For Las

While a Loan Against Securities (LAS) offers liquidity and flexibility, it's essential to remain vigilant and make informed choices to maximise its benefits. Here are five key tips to keep in mind:

Factor	Details
Choose the Right Lender or Financial Institution	Compare lenders on rates, accepted securities, and hidden fees. Choose one offering competitive terms and wide asset acceptance.
Maximise Variety and Select the Right Collaterals	Use stable assets with lower risk. Avoid highly volatile securities that may require frequent top-ups due to market fluctuations.
Consider Repayment Strategies	Plan repayment in advance. Opt for flexible options that align with your income flow and financial obligations.
Keep Required Documents Handy	Have your KYC documents, Demat account details, and income proof ready to expedite the loan approval process.
Be Wary of Hidden Charges and Fees	Always read the fine print. Be aware of processing, renewal, pledge, and transaction fees before signing; enquire about such charges.

Conclusion

A loan against securities (LAS) is a valuable tool, particularly when you require immediate funds, offering features such as lower interest rates compared to personal loans and no transfer of ownership. However, to ensure a smooth borrowing experience, it is imperative to exercise caution and stay well-informed about the specific rules and guidelines governing this financial arrangement.

FAQs

Can I apply for LAS jointly with another person?

Yes, joint LAS applications are allowed if both applicants co-own the pledged securities and meet the lender’s eligibility criteria.

Do I need a Demat account for LAS?

Yes, a Demat account is typically required to pledge shares or mutual fund units to a lender digitally.

Will LAS affect my credit score?

If you default or delay payments, it may negatively impact your credit score, just as with any other secured loan.

Is there a minimum loan amount for LAS?

Some lenders set a minimum LAS amount, typically starting from ₹50,000 to ₹1 lakh, depending on the institution.

Can NRIs avail of LAS in India?

Some banks allow NRI customers to avail of LAS against eligible securities, subject to FEMA guidelines and the bank's specific policies.

About Author

Upstox Desk

Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.