Loan Against Shares — Unlock Liquidity Without Selling a Single Share
Pledge your BSE/NSE-listed equities, ETFs, or SGBs as collateral and access a flexible overdraft — all while retaining full ownership, dividends, and portfolio upside.
What Is Loan Against Shares (LAS)?
A Loan Against Shares is a secured overdraft facility regulated by SEBI and RBI that allows you to borrow money by pledging your equity shares, ETFs, or Sovereign Gold Bonds as collateral — without selling them. You continue to benefit from dividends, bonus shares, and portfolio appreciation throughout the loan tenure.
Unlike a personal loan, LAS is fully secured — which is why interest rates are far lower (10–12% vs 16–18% for unsecured loans). The lender marks a lien on your demat account through CDSL/NSDL. No physical transfer of shares takes place. When you repay, the lien is released and your portfolio is fully restored.
How LAS Works — Step by Step
From valuation to disbursal — understand the four core mechanisms that define a Loan Against Shares facility.
Valuation and Eligibility
The lender values your portfolio using the SEBI-approved list of eligible scrips. BSE/NSE-listed equities, SGBs, ETFs, and select mid-cap stocks qualify. Penny stocks and suspended securities are excluded.
LTV Ratio Determined
Loan-to-Value ratio is set based on asset class and scrip category — up to 50% for large-cap equities, lower for mid/small-caps. Your overdraft limit is calculated from the LTV-adjusted portfolio value.
Marking a Lien via CDSL/NSDL
You authorise a pledge on your demat holdings digitally through the depository's TPIN/OTP mechanism. No share certificates are transferred — a lien is simply marked on your existing demat account.
Repayment and Interest
Interest is charged daily on the utilised overdraft balance. You can repay in full or part at any time with no prepayment penalty. As the loan is repaid, the pledge is released proportionally.
Key Features and Benefits of LAS
Six key advantages that make a Loan Against Shares the most capital-efficient short-term borrowing option for equity investors.
No Need to Sell
Retain full ownership of your portfolio. Your shares remain pledged but you continue to hold them — you keep any dividends, bonuses, and rights through the loan tenure.
High Loan Amount
Access up to 50% of your portfolio value (LTV) as an overdraft — and more as the portfolio grows. No ceiling on loan size beyond the approved LTV ratio.
Flexible Overdraft Facility
Funds disbursed as an overdraft — draw only what you need, repay anytime. Interest is charged only on the utilised amount, not the entire sanctioned limit.
Competitive Interest Rates
Since the loan is fully secured by your securities, interest rates are significantly lower than personal loans or credit cards — typically 10–12% p.a.
Continue Earning Benefits
Dividends, bonus shares, and rights entitlements continue to accrue in your demat account even while the shares are pledged — full portfolio upside retained.
Digital Pledge Process
Pledge securities digitally through CDSL/NSDL. No physical share certificates, no branch visits. The entire process is completed online within 24–48 hours.
Eligible Securities and Approved Scrip List
Not all securities qualify for LAS. SEBI mandates that only exchange-listed, liquid, and independently-valued securities can be pledged. Below are the four main asset classes accepted, with their respective LTV ratios.
Security Type
LTV (Max)
Examples
BSE/NSE Listed Large-Cap
Up to 50%
NIFTY 50, BSE 100 constituent stocks
Mid-Cap Equities
Up to 40%
NIFTY Midcap 150 constituents (SEBI approved)
Exchange-Traded Funds (ETFs)
Up to 50%
NIFTY 50 ETF, Liquid BeES, Gold ETF
Sovereign Gold Bonds (SGBs)
Up to 50%
RBI-issued SGBs held in demat form
Penny stocks, suspended securities, unlisted shares, and Futures & Options positions are not eligible for pledging under LAS.
Interest Rates and Fees
LAS is one of the lowest-cost secured borrowing products available to retail equity investors in India. Interest is charged only on the utilised overdraft balance — not the full sanctioned limit.
Fee / Rate Item
Current Rate / Detail
Applicable Interest Rate
10% – 12% p.a. (reduces with higher loan utilisation)
Interest Calculation
Daily reducing balance on the utilised overdraft amount
Processing Fee
0.25% – 0.50% of the sanctioned limit (one-time)
Prepayment Penalty
Nil — repay any amount at any time without charges
Annual Renewal Fee
0.10% – 0.25% of the limit on annual renewal
LTV Ratio and Margin Call
The Loan-to-Value ratio determines how much you can borrow. SEBI caps LTV at 50% for listed equities. A margin call is triggered when your portfolio falls below the required collateral threshold — understanding this mechanism helps you avoid forced sales.
LTV Safety Buffer Table
Portfolio Value
Overdraft Limit
Margin Call Threshold
₹20 lakh portfolio, 50% LTV
₹10 lakh overdraft
Margin call if portfolio falls below ₹16.67 lakh at full utilisation
₹50 lakh portfolio, 50% LTV
₹25 lakh overdraft
Margin call threshold at ₹31.25 lakh under full utilisation
₹10 lakh mid-cap, 40% LTV
₹4 lakh overdraft
Margin call threshold at ₹6.67 lakh portfolio value
How to Handle a Margin Call
Pledge additional eligible securities to increase total collateral value
Deposit cash to partially repay the overdraft outstanding
Sell some pledged securities yourself via your broker to reduce the loan balance
5 Tips to Avoid a Margin Call
Keep loan utilisation below 70% of the sanctioned limit
Maintain a 20–25% buffer above the minimum collateral requirement
Avoid pledging highly volatile mid-cap stocks as sole collateral
Set price alerts on pledged scrips to monitor portfolio value in real time
Review and rebalance pledged holdings quarterly — remove underperformers proactively
Eligibility Criteria and Documents
LAS eligibility is straightforward — most investors with a standard demat account holding listed equities qualify within minutes of submitting their application.
Eligibility Criteria
Indian resident individual aged 21 years and above
Active demat account with CDSL or NSDL
Holdings in SEBI-approved eligible scrips (minimum value ₹1 lakh)
Valid PAN card linked to demat account
Bank account in the borrower name for overdraft credit and repayment
Documents Required
PAN Card — mandatory for all loan applications
Aadhaar Card or other government-issued photo ID
Demat Account statement (latest 3-month holding statement)
Cancelled cheque or latest bank account statement
Address proof if different from Aadhaar address
How to Apply for LAS
Five steps from initial application to overdraft activation. The entire process is digital and takes 24–48 hours from submission to fund disbursal.
Apply Online or via App
Visit shriramfinancialservices.com or the Shriram mobile app. Fill in your name, mobile number, city, and demat details to begin.
eKYC and Document Upload
Complete eKYC using Aadhaar OTP or DigiLocker. Upload your PAN, demat statement, and bank details — all digital, no physical documents required.
Portfolio Assessment
Our system fetches your current holdings and calculates the eligible LTV-adjusted overdraft limit. You receive a detailed breakdown of each scrip within minutes.
Digital Pledge via CDSL/NSDL
Authorise the pledge using your demat TPIN or Aadhaar OTP. A lien is marked on your selected holdings — shares remain in your demat account throughout.
Overdraft Activated
Your overdraft account is activated and funds credited within 24–48 hours. Draw only what you need — interest starts only on the amount drawn.
LAS vs Other Loan Types
How does LAS compare to personal loans, home loans, and Loan Against Property? Choose the right facility based on your need, collateral, and cost sensitivity.
Factor
Loan Against Shares
Personal Loan
Home Loan / LAP
Interest Rate
10–12% p.a. (secured)
14–18% p.a. (unsecured)
8–13% p.a. (property-backed)
Collateral
Shares / ETFs / SGBs
None
Property / home
Disbursal Time
24–48 hours
2–5 business days
7–15 business days
Prepayment
Nil penalty
2–4% penalty
Nil to 2% depending on lender
Portfolio Upside
Fully retained
N/A
N/A
Best For
Investors with equity portfolio needing short-term liquidity
Short-term needs, no collateral
Long-term needs against property
Top Use Cases for LAS
LAS is uniquely suited for investors who hold significant equity wealth but need short-term cash without disrupting long-term wealth creation goals.
Emergency Liquidity
Cover medical emergencies, urgent travel, or unexpected costs without disrupting your long-term equity portfolio — retain all portfolio upside.
Business Cash-Flow Bridge
Bridge short-term working capital gaps or fund business expansion without selling profitable equity positions at an inopportune time.
IPO and NFO Subscription
Fund IPO or NFO applications during the subscription window. Repay within days once allotment is received without selling existing holdings.
Derivatives Margin
Use LAS overdraft to fund F&O margin requirements while keeping your long equity book intact for the medium term.
Education Fees
Pay term fees or overseas tuition without liquidating long-term equity holdings that have significant unrealised appreciation.
Real Estate Down Payment
Bridge a property down payment gap temporarily — repay once the primary home loan is disbursed or property registration is complete.
Tax Implications of LAS
Pledging shares does not trigger a tax event in India. Capital gains tax applies only when shares are actually sold — not when pledged. Here are the key tax considerations every LAS borrower should know.
Tax Item
Treatment
Interest Paid on LAS
Business income borrowers: deductible as business expense. Personal borrowers: no deduction under standard income tax rules.
Pledged Shares — Capital Gains
No capital gains tax on pledging. Tax arises only when shares are actually sold — a pledge alone is not a taxable event.
Forced Sale by Lender
If the lender sells pledged shares to recover dues after a margin call, capital gains tax applies on that sale in the hands of the borrower.
Dividend on Pledged Shares
Dividends received during the pledge period are fully taxable as income. They are not offset against the loan interest automatically.
Tax rules are subject to change. Consult a SEBI-registered tax adviser for personalised guidance on LAS taxation.
RBI & SEBI Regulatory Framework
LAS is one of the most tightly regulated lending products in India. Before you apply, understand the five key regulatory rules that govern every Loan Against Shares transaction.
SEBI Guidelines cap LTV at 50% of portfolio value for listed equities — no lender can offer more regardless of portfolio size or quality.
RBI Circular (2020) requires separate demat and bank accounts for pledge and loan: the lender cannot hold the borrower demat account directly.
Securities pledged under LAS cannot be sold by the lender without first issuing a margin call notice and giving the borrower a reasonable window to respond.
All LAS transactions must flow through the SEBI-mandated CDSL/NSDL pledge mechanism — informal pledges or physical share transfers are non-compliant.
LAS lenders must be RBI-registered NBFCs, scheduled commercial banks, or SEBI-registered entities — verify registration before signing any agreement.
Frequently asked
questions.
What is a Loan Against Shares (LAS)?
LAS is a secured overdraft facility where you pledge your equity shares, ETFs, or SGBs as collateral to borrow money. You retain ownership and all portfolio benefits — the lender only marks a lien on your holdings. You get up to 50% of the portfolio value as an overdraft and interest is charged only on the amount you draw.
What is the LTV ratio in LAS?
The Loan-to-Value (LTV) ratio is the percentage of your pledged portfolio that you can borrow. SEBI caps LTV at 50% for listed equities. A portfolio worth ₹20 lakh gives a maximum overdraft of ₹10 lakh. Mid-cap stocks may have a lower LTV of 30–40% depending on the scrip.
What happens if my portfolio value falls — margin call?
If your pledged portfolio value drops and the loan-to-market-value ratio breaches the threshold (typically 80% of the loan), the lender issues a margin call. You can respond by pledging additional securities, depositing cash, or partially repaying the overdraft. If unaddressed, the lender may sell pledged shares.
Can I still receive dividends on pledged shares?
Yes. Pledging shares does not transfer ownership. Dividends, bonus shares, rights entitlements, and all other corporate actions continue to accrue in your demat account throughout the pledge period.
How quickly is LAS disbursed?
After eKYC, document verification, and CDSL/NSDL digital pledge authorisation, the overdraft is typically activated and credited within 24–48 hours. No physical documents or branch visits are required.
Unlock Liquidity from Your Portfolio — Without Selling a Share
10–12% p.a. · Up to 50% LTV · 24–48 hr disbursal · 5,000+ approved scrips · Digital pledge via CDSL/NSDL · Shriram Group 25+ years trust.