Loan Against Securities (LAS)

Loan Against Securities (LAS) allows investors to access liquidity without selling their investments. Securities are pledged (not sold) to the lender as collateral. Eligible securities include listed equity shares, mutual funds, government bonds, corporate bonds, insurance policies, and fixed deposits.

LTV ratios vary by security type: typically 50% for equity shares (due to market volatility), 60-70% for mutual funds, and up to 80-85% for government securities and FDs. Interest rates are generally 9-14% p.a.

A key advantage is that the borrower continues to earn dividends, interest, or returns on the pledged securities. The loan can be structured as an overdraft facility, providing flexible draw-down and repayment. If the value of pledged securities drops significantly, the lender may issue a margin call requiring additional securities or partial repayment.

LAS provides liquidity without disrupting long-term investment strategies. Investors can meet short-term needs without selling assets that may have tax implications or growth potential.