What is Loan Against Securities (LAS) - Meaning & Benefits

When you need urgent funds, one of the first thoughts that may come to mind is to liquidate your existing investments. While this provides quick access to money, it often comes with disadvantages such as losing out on potential future gains, disrupting long-term financial goals, or even incurring exit load expenses.

Instead of selling your assets, there are smarter secured loan options that allow you to raise funds without giving up ownership of your investments.

A Loan Against Securities (LAS full form) is one such facility offered by financial institutions that enables borrowing against shares and other investments. In this article, we’ll learn about the meaning of Loan Against Securities and how they can help manage your short-term financing needs without compromising your long-term wealth-building strategy.

What Is a Loan Against Securities?

A Loan Against Securities is a type of credit facility where you can borrow money by pledging your investments as collateral. Instead of liquidating your portfolio, you can use financial assets such as equity shares, mutual funds, or bonds to secure the loan.

In simple terms, it is a loan using financial securities, where the financial institution offers you funds against the value of your pledged securities. You continue to remain the owner of these investments and can benefit from any potential growth, while the lender holds them as security until the loan is repaid.

How Is a Loan Against Securities Different from Personal Loans?

While both LAS and a personal loan can be used to meet urgent financial needs, they differ in key ways. A Loan Against Securities is a secured loan, where your investments act as collateral. In contrast, a personal loan is an unsecured loan, which does not require any pledged assets. Being backed by collateral, LAS interest rates are usually lower compared to those of personal loans.

Another distinction lies in how the loan amount is determined. With LAS, the sanctioned amount is also influenced by the lender’s Loan-to-Value (LTV) ratio, whereas in the case of a personal loan, it is more closely tied to your income level, repayment capacity, credit score, and other factors.

In addition, LAS offers the benefit of prepayment without extra charges*, while personal loans may attract prepayment penalties depending on the lender’s terms and the number of EMIs already paid.

What Are the Benefits of a Loan Against Securities?

Here are some of the key advantages of Loan Against Securities:

• High Loan-to-Value (LTV) ratio, typically ranging from 50–85%*
• No prepayment charges* – repay anytime without penalties
• Pay interest only on the amount utilised*
• Whether you want a Loan Against Mutual Funds or a Loan Against Stocks and Bonds, a wide range of approved securities is available
• Minimal documentation and online application ease for faster processing
• Lower interest rates compared to unsecured loans
• Continue earning potential returns on securities

Eligibility Criteria for a Loan Against Securities

Here are the common requirements:

• Eligible Entities: Resident Indian individuals, Public and Private Limited Companies, Partnership Firms, Limited Liability Partnerships (LLPs), Private Trusts, Sole Proprietorships, Hindu Undivided Families (HUFs).
• Age: Minimum 21, and the applicant must be able to show a steady income proof.
• Account: A valid Savings, Current, and Demat Account is necessary.
• Credit Score: A minimum credit score of 600 is required.
• Portfolio Value: The borrower must hold approved securities with a minimum portfolio value of INR 10 lakhs.

*These are the basic eligibility criteria. Final loan approval will be subject to an overall assessment of the applicant’s profile as well as the lender’s policies at the time of application.

Fees and Charges Involved in a Loan Against Securities

Apart from the standard interest rates, you should also consider the following fees and charges, which may differ depending on the lender:

• Processing fees
• Stamp duty/registration (as per the relevant state laws)
• Annual maintenance/renewal charges
• Late payment penalties
• Liquidation charges*

*Applicable for Securities in demat form

What Affects Your LAS Interest Rate?

The applicable LAS interest rate depends on a variety of factors, including:

• The type of pledged securities
• Their current market value
• Overall eligibility and creditworthiness
• Lender’s policies at the time of the loan application

Things to Consider Before You Apply

Before applying for a Loan Against Securities, keep the following in mind:

• Check the lender’s loan approval process and timelines
• Review the available loan tenure options to match your needs (typically up to 60 months*)
• Understand all applicable processing fees and other charges
• Look for loan repayment flexibility to avoid future constraints

What Securities Can Be Pledged?

The following financial instruments can generally be pledged:

• Shares
• Bonds
• Mutual funds
• ETFs

How to Apply for a Loan Against Securities?

Here’s how you can easily apply for a Loan Against Securities at SMFG India Credit:

1. Click here to initiate your application.
2. Provide your basic personal and security-related details as requested.
3. You’ll get a reference number after successful submission, and our representative will reach out to guide you through the next stages.

If you prefer applying offline, visit your nearest SMFG India Credit branch and connect with a customer care representative. You can also contact us at our toll-free number 1800 419 8900 from 9:00 AM to 7:00 PM (every day except Sundays, the 4th Saturday of the month, and public holidays), or write to us at [email protected].

Common Uses of a Loan Against Securities

A Loan Against Securities can be used for a variety of financial needs, such as:

• Meeting medical or emergency expenses
• Funding higher education
• Business expansion or working capital
• Home renovation or property-related costs
• Travel or lifestyle expenses

Conclusion

A Loan Against Securities offers a smart way to access funds without liquidating your investments, giving you both flexibility and convenience. With an SMFG India Credit LAS, you can enjoy an LTV of up to 50–85%* and competitive interest rates, along with quick processing and minimal documentation. To get started, review our LAS eligibility criteria and documents, and apply online today.