Fullerton India Credit Co. Ltd. is Now SMFG India Credit Co. Ltd.

4 Things to Remember When You Avail a Loan Against Securities

Published on May 2, 2022Updated on Jan 29, 2024

4 Things to Remember When You Avail a Loan Against Securities

Financial needs can arise unexpectedly and given the economy's changing consumption tendencies and growing prices; such short-term requirements may prove challenging to provide. A Loan Against Securities (LAS) provides individuals who have invested in financial assets an excellent solution to get access to a line of credit, thereby allowing them to borrow amounts for short-term needs within the approved limits. 

The process for loan applications is straightforward. Reputed lenders offering this product allow you to apply online through their website. Next, the lender will check your eligibility and evaluate the pledged assets. If all aspects go well, you will be offered a limit and you can start utilizing this facility to borrow funds as needed. 

Mutual funds, listed shares, ETFs, and so on are examples of these securities. This facility is frequently used similarly to an overdraft, and you keep your investment portfolio and all the perks that come with it. Availing a loan against securities can result in quick cash without losing the investment. When the borrower will start to repay the loan, the securities will keep growing depending on the performance. 

Pledging securities in exchange for a line of credit from a lender is the foundation of LAS. It's critical to secure the financial viability of the securities in the long run, as well as the health of the portfolio you're managing. A portfolio with a mix of securities versus a portfolio with only one type of security would provide customers with various benefits. Assess and examine your needs with your lender before making a decision.

Four Points to Remember When Availing a Loan Against Securities

1. Compare the Lenders and Go with the One Who Offers a High Loan Amount

Research is key. Make sure you take time to research the market and go for the lender who gives the most value for your investments. At SMFG India Credit, we offer an LTV (loan to value) of upto 50%-85% depending on the nature of the securities pledged to eligible borrowers.  Following are the securities that can be pledged for availing this facility:

  • Listed Shares
  • Mutual Funds
  • Exchange Traded Funds
  • Bonds

2. Make Sure To Check If Your Securities Come Under The Approved List

Lenders provide a list of securities that one can pledge to get access to funds. Hence, while doing research on lenders, make sure to also make sure that your holdings and securities are eligible to avail loan. Some lenders also provide pre-approved loans against securities where these offers are hassle free and require one step verification. At SMFG India Credit, we have one of the widest ranges of listed shares, mutual funds and bonds against which eligible borrowers can avail the LAS facility.  

3. Make Sure You Match the Eligibility Criteria and Submit All Essential Documentation

It is strongly advised to check the lender’s eligibility criteria before applying. To apply for a loan against securities facility from SMFG India Credit:  

  1. Individuals must be between 21 to 70 years of age. 
  2. Partnerships, LLPs and companies listed in India can also apply
  3. Minimum CIBIL score of 650 with a good credit history
  4. Applicants must have full ownership over securities like listed shares, mutual funds, etc. in line with the acceptability criteria
  5. Applicants must have the requisite documentation

Here are the basic documents required for availing a loan against securities

  • PAN card
  • Identity and address proof
  • Proof of ownership of pledged securities
  • Bank account statements
  • Income proof such as financial statements may also be requested.

Please note that this is just the basic list. Depending on your profile and our policy, additional documents may also be requested.

Apply for the Loan Online by Filling in Your Details

The application process is very straightforward at SMFG India Credit. Just click on the “Apply now” button on this page to begin your online application. Apart from your basic details, the total value of securities have to be mentioned. After you submit your application, we will evaluate your details depending on your eligibility.

If you keep in mind these four points, it will be very easy for you to avail the loan on securities and opting for a loan against securities can keep intact the value of the shares for future growth of funds.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

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