What Is a Loan Against Securities?
Complete Guide to Mutual Funds, Shares, Bonds & Other Investments
If you have investments such as mutual funds, shares, bonds, government securities or certain insurance policies, you may not always need to sell them when you require money. A Loan Against Securities (LAS) allows eligible investors to raise funds by pledging their investments as collateral.
The biggest advantage is that you can potentially get liquidity while continuing to own your investments. ICICI Bank, for example, describes LAS as a facility against securities such as mutual funds, shares, Sovereign Gold Bonds, insurance policies and other marketable securities.
What Is a Loan Against Securities?
A Loan Against Securities is a secured loan or overdraft facility where eligible financial investments are pledged with a bank or financial institution.
Instead of selling your investments to arrange money, you pledge them to the lender. The lender determines the eligible loan amount based on the type and current value of the securities.
For example, suppose you have investments worth ₹20 lakh in eligible mutual funds and shares. Depending on the lender’s policy and the risk associated with those investments, you may be able to borrow a portion of that value.
ICICI Bank states that eligible loan values can vary from approximately 50% to 80% of the value of pledged securities, depending on the security and the bank’s policies.
The exact percentage is called the Loan-to-Value (LTV) and differs according to the investment.
What Investments Can Be Used as Security?
The exact list varies between lenders, but Loan Against Securities can potentially be available against:
Mutual Funds
Equity Shares
Bonds
Debentures
Government Securities
Sovereign Gold Bonds
Certain insurance policies
Other approved marketable securities
Not every share, mutual fund or bond will necessarily be accepted. The lender maintains a list of eligible securities and may change that list based on risk and market conditions.
For example, ICICI Bank specifically identifies mutual funds, Sovereign Gold Bonds, shares, insurance policies and other marketable securities as potential collateral under LAS.
How Does Loan Against Securities Work?
The process is relatively simple.
Suppose you have ₹10 lakh of eligible investments and the lender provides an LTV of 60%.
Your potential borrowing limit could be approximately:
₹10 lakh × 60% = ₹6 lakh
You pledge the eligible investments with the lender, and the lender provides a loan or overdraft facility against them.
One important feature of some LAS products is that you may pay interest only on the amount you actually utilise rather than on the entire sanctioned limit. ICICI describes its LAS facility as an overdraft arrangement where interest is charged on the utilised amount.
This can make LAS particularly useful for short-term funding requirements.
Who Can Get a Loan Against Securities?
Generally, an eligible individual who owns acceptable securities can apply.
Potential applicants may include:
Salaried individuals
Self-employed professionals
Business owners
Investors
High-net-worth individuals
Existing bank customers
Other eligible individuals
The lender may consider:
Age
KYC status
Type of investment
Current market value
Ownership of securities
Credit profile, where applicable
Requested loan amount
Repayment capacity
Lender-specific eligibility criteria
The securities must generally be owned by the borrower and capable of being pledged through the relevant depository, mutual-fund platform or other approved mechanism.
How Much Loan Can You Get?
The loan amount depends primarily on the value and type of securities.Equity shares can attract a lower LTV than some lower-risk securities because share prices can fluctuate significantly.
What Is the Approximate ROI on a Loan Against Securities?
ROI means Rate of Interest.
One of the major attractions of LAS is that it is generally a secured form of borrowing, so the interest rate can be more competitive than an unsecured personal loan.
However, there is no single LAS interest rate applicable to all borrowers. It depends on:
Type of security
LTV
Loan amount
Credit profile
Lender
Relationship with the lender
Whether the facility is an overdraft or term loan
Market conditions
As a broad 2026 indication, a Loan Against Securities may commonly be offered around 8%–12%+ per annum, although actual rates can be outside this range.
For comparison, SBI currently displays some loan products starting around 7.25% p.a., while its published rates vary by product and borrower conditions.
Therefore, borrowers should ask the lender for the actual ROI applicable to the specific securities being pledged rather than relying on a general advertised rate.
What Are the Benefits of Loan Against Securities?
1. No Need to Sell Investments
You can potentially access funds without liquidating your investment portfolio. This can help avoid selling investments at an inconvenient market price.
2. Potentially Lower Interest Rate
Because investments are provided as security, LAS can be cheaper than many unsecured borrowing options.
3. Flexible Borrowing
With an overdraft structure, you may be able to withdraw only what you need and pay interest on the amount utilised, depending on the lender’s product.
4. Continued Ownership
Pledging securities generally does not mean you immediately sell them. You retain ownership subject to the lender’s terms and pledge arrangement.
5. Useful for Short-Term Requirements
LAS can be particularly useful for temporary funding needs where you expect to receive money in the near future.
What Are the Risks?
Loan Against Securities is not risk-free.
Market Value Can Fall
If the value of your pledged shares or mutual funds falls significantly, the lender may require additional collateral or repayment of part of the outstanding amount.
Possible Sale of Securities
If you fail to meet the lender’s requirements or repay the facility, the lender may ultimately sell the pledged securities to recover its dues, subject to the applicable agreement and regulations.
Investment Returns Are Not Guaranteed
Your investment may continue to fluctuate while the loan is outstanding. Therefore, don’t assume that investment returns will necessarily exceed the loan interest.
Documents Generally Required
The requirements vary, but lenders may request:
PAN
Aadhaar/identity proof
Address proof
Bank account details
Demat account information
Mutual fund holding statement
Shareholding statement
KYC documents
Income documents, where required
The lender will also verify whether your investments are eligible for pledging.
How to Apply for a Loan Against Securities
The typical process is:
Step 1: Check whether your shares, mutual funds or bonds are eligible.
Step 2: Determine the current market value of your investments.
Step 3: Check the applicable LTV and potential borrowing limit.
Step 4: Apply online or through the lender.
Step 5: Complete KYC and pledge the securities.
Step 6: The lender establishes the approved loan/OD limit.
Step 7: Withdraw the required amount according to the facility terms.