Loans against Shares: Your Ticket to Quick Cash and Financial Freedom

If you are looking for a quick and convenient way to access funds, without having to sell your equity shares, then a loan against equity shares could be the ideal solution for you. This would allow you to borrow money by pledging your equity shares as collateral. 

In this blog, we will explore the benefits of such loans and how they can help you achieve financial freedom.

Quick and easy access to funds

One of the primary benefits of such loans is that it provides quick and easy access to funds. Unlike traditional loans, which can take weeks or even months to process, a loan against shares can be processed quickly. 

Once you pledge your equity shares as collateral, the lender can disburse the loan amount to your bank account within a few days.

No impact on credit score

It does not have any impact on your credit score. This is because the lender does not perform a hard credit check during the loan application process. 

Instead, they use the equity shares as collateral for the loan, which means that your creditworthiness is not a factor in the loan approval process.

High loan-to-value ratio

These loans typically offer a high loan-to-value (LTV) ratio. This means that you can borrow a larger amount of funds compared to the value of the equity shares that you pledge as collateral. 

The LTV ratio varies from lender to lender, but it can be as high as 80% in some cases. This can be particularly helpful if you need a large number of funds but have a small portfolio of equity shares.

No need to sell your equity shares

Such kinds of loans allow you to access funds without having to sell your equity shares, which means that you can continue to benefit from their long-term growth potential.

Easy loan repayment

Loans against equity shares offer easy repayment options. You can opt for monthly, quarterly, or annual repayments, depending on your cash flow requirements. 

Furthermore, you can also prepay the loan without any penalty, which means that you can repay the loan earlier than the scheduled tenure and save on interest payments.

Minimal documentation

You only need to provide the necessary documents related to your equity shares, such as share certificates, demat account statements, and KYC documents which ensures minimal documentation compared to other types of loans. This can save you a lot of time and effort in the loan application process.

Tax benefits

It may offer tax benefits in certain situations. For example, the interest paid on the loan can be claimed as a deduction against capital gains tax if the loan is used for investments. This can help you save on taxes and improve your overall financial situation.

Lower interest rates

Such loans typically offer lower interest rates compared to other forms of unsecured loans, such as personal loans or credit card loans. This is because the equity shares serve as collateral for the loan, which reduces the lender’s risk. As a result, they are willing to offer lower interest rates to borrowers. 

No impact on ownership rights

Pledging your equity shares as collateral for a loan does not impact your ownership rights. You still retain ownership of the shares and continue to receive dividends and other benefits associated with them.

Risks to consider

While loans against shares offer several benefits, there are some risks to consider. If the value of your equity shares declines significantly, the lender may ask you to pledge additional shares as collateral or repay the loan immediately. 

This can result in a forced sale of your equity shares, which can result in losses. Additionally, if you are unable to repay the loan, the lender may sell the pledged shares to recover the outstanding amount.

Loan tenure

The tenure for loans against shares may range from a few months to a few years, depending on the lender’s policies and the borrower’s requirements. Borrowers may also have the option to choose a flexible repayment schedule, which allows them to repay the loan in instalments rather than a lump sum payment.

Loan amount

The maximum loan against shares may vary based on the market value of the shares being pledged as collateral. Typically, lenders offer loans up to a certain percentage of the market value of the shares, which can range from 50% to 80%.

Processing time

Such loans can be processed quickly as the documentation required is minimal, and the lender can evaluate the value of the shares quickly. This means that borrowers can access funds quickly and easily without going through a lengthy approval process.


Such loans can be an effective way to access funds without having to sell your equity shares. However, it is important to consider the risks and benefits of such loans before deciding. 

It is also vital to choose a reliable and trustworthy lender who offers competitive interest rates and flexible repayment options.