Everything You Need to Know About Loan Against Securities (LAS)

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In 2026, Indian investors no longer need to liquidate long-term investments to meet short-term liquidity needs. With equity markets continuing to reward patient investors and interest rates stabilising, a Loan Against Securities (LAS) has emerged as one of the smartest ways to access funds without breaking your wealth building strategy.

A Loan Against Securities allows you to pledge your existing investments such as shares, mutual funds, bonds, or insurance policies and borrow money against them at significantly lower interest rates compared to unsecured loans.

This guide explains how LAS works in India, current interest rates, RBI regulations, risks, eligibility, and why it has become a preferred credit option for investors, professionals, and business owners.

What Is a Loan Against Securities (LAS)?

A Loan Against Securities (LAS) is a secured credit facility where you pledge financial assets as collateral to avail a loan or overdraft facility. Instead of selling your investments, you temporarily use them as security to raise funds. The pledged securities remain in your ownership.

You continue to benefit from potential capital appreciation, dividends, bonuses, and interest income while accessing liquidity when required. Unlike personal loans, LAS is usually offered as a flexible overdraft facility, meaning you pay interest only on the amount you actually use and for the duration you use it.

How a Loan Against Securities Works

The LAS process in India is fully digital and designed for speed and transparency. Once your securities are pledged, the lender provides you with a sanctioned credit limit based on the value and type of assets.

You can withdraw funds partially or fully within this limit at any time. Interest is calculated daily on the utilised amount, not on the total sanctioned limit. When you repay, your available limit is restored automatically.

This structure makes LAS ideal for short-term or intermittent funding needs such as business expenses, tax payments, emergency medical costs, or investment opportunities.

Overdraft vs Term Loan: Why Smart Borrowers Prefer LAS

Most experienced investors prefer LAS over traditional term loans because of its flexibility and cost efficiency.

For example, if you secure a ₹10 lakh LAS limit and use only ₹1 lakh for one month, you pay interest only on ₹1 lakh. At an annual interest rate of 9%, the cost for 30 days is approximately ₹740.

In contrast, a ₹10 lakh personal loan would attract interest on the entire amount from day one, regardless of how much you actually need. This makes LAS significantly cheaper for short-term requirements.

RBI Regulations and the 2026 Lending Landscape

The Reserve Bank of India closely regulates Loans Against Securities to protect borrowers and maintain systemic stability. Under current RBI guidelines:

Equity shares can be financed up to 50% Loan-to-Value (LTV)
Debt mutual funds are allowed up to 85% LTV
Bonds and select insurance policies can go up to 90% LTV

With the RBI repo rate at 5.25% in early 2026, banks and NBFCs operating under co-lending models can offer competitive interest rates to borrowers. This regulatory clarity has made LAS safer, more transparent, and more accessible than ever before.

Loan Against Securities Interest Rates in 2026

Interest rates on LAS are generally lower than unsecured loans because the facility is backed by liquid collateral. In 2026, typical interest rates range between 8.5% and 11% per annum, depending on:

Type of securities pledged
Portfolio quality and diversification
Market volatility
Borrower’s credit profile

Compared to personal loans that often exceed 15–25% per annum, LAS offers a clear cost advantage.

Loan Against Securities vs Other Secured Loans

When choosing a credit option, it is important to understand how LAS compares with alternatives. A Loan Against Securities offers digital collateral, faster processing, and continued asset growth.

Gold loans require physical gold and carry higher interest rates. Loan Against Property (LAP) offers similar rates but involves lengthy documentation and disbursement timelines. LAS stands out for investors who already hold financial assets and need quick, flexible funding.

Digital Lien Marking Process Explained

When you pledge securities, a lien is created on your assets. A lien is a digital restriction that prevents selling the pledged securities until the loan is repaid.

The process involves:

You authorise access to your Demat or mutual fund holdings through secure depository systems such as NSDL or CDSL. You select the securities to be pledged and confirm the request via OTP authentication.

Once approved, the lien is marked digitally, and your credit limit is activated often within a few hours. At no point are your assets transferred to the lender. They remain visible in your Demat or mutual fund account.

Real-Life Use Case: Mumbai Entrepreneur

In December 2025, a Mumbai-based technology entrepreneur faced an unexpected tax liability of ₹18 lakh. Selling his equity portfolio during a market dip would have resulted in losses and short-term capital gains tax.

Instead, he pledged blue-chip shares worth ₹40 lakh and received ₹20 lakh through a Loan Against Securities facility within 3.5 hours. He repaid the amount after four months when business cash flows normalised.

By using LAS, he avoided selling investments, protected long-term returns, and saved significantly on taxes.

Understanding Risks and Margin Calls

While LAS is a powerful financial tool, it is not risk-free. The primary risk arises from market volatility. If the value of pledged securities falls sharply, the loan-to-value ratio may breach permissible limits.

In such cases, the lender may issue a margin call, asking you to either repay a portion of the loan or pledge additional securities.

To mitigate this risk, disciplined borrowers maintain buffers, monitor markets, and diversify pledged assets. Advanced lenders also provide proactive alerts before critical thresholds are breached.

Who Should Consider a Loan Against Securities

LAS is suitable for investors who hold quality financial assets and require short-term or flexible funding without disrupting long-term investment plans. It is commonly used by business owners, self-employed professionals, salaried individuals with investment portfolios, and high-net-worth individuals.

However, LAS may not be suitable for individuals with highly volatile portfolios or those who require long-tenure fixed repayment loans.

Eligibility and Documentation

Eligibility criteria for LAS are straightforward. Borrowers must typically be between 18 and 75 years of age and hold eligible securities in approved Demat or mutual fund accounts.

Basic documentation includes PAN, Aadhaar, and bank account details. Since LAS is a secured facility, even borrowers with moderate credit scores may qualify.

Frequently Asked Questions

Q1. Can I sell my pledged securities?
No. Securities must be unpledged by repaying the loan or substituting collateral before sale.

Q2. Will I continue to receive dividends and bonuses?
Yes. All corporate actions and income are credited directly to your bank account.

Q3. Is there a minimum loan amount?
Many lenders, including Abhi Loans, offer LAS starting from as low as ₹10,000.

Why Abhi Loans for Loan Against Securities

Abhi Loans specialises in digital lending solutions backed by strong compliance and risk frameworks. With fast disbursal, transparent pricing, and RBI-aligned lending partners, Abhi Loans makes borrowing against investments simple, secure, and efficient.