A loan against security is a loan advance to a customer against a pledge of security. It can be a loan against an insurance policy, mutual funds, National Savings Certificate, and other securities. Loan against security can be given against the following securities:
- Insurance policies
- Non-convertible debentures
- NABARD Bonds
- UTI Bonds
- Mutual fund units
- Demat shares
- National Savings Certificate or KVP, these are accepted in Demat form only.
The following documents are required along with your Loan Against Securities application:
A borrower who is salaried must submit the following documents:
- PAN card
- Identity and address proof
- Photograph
- Last 6 months bank statement
- Cancelled cheque
- Demat account statement
- Income proof
A borrower who is self-employed must submit the following documents:
- PAN card
- Identity and address proof
- Photograph
- Last 6 months bank statement
- Canceled cheque
- Demat account statement
- Income proof
- Balance sheet and profit and loss account
- Office address proof and the existence of business proof
FAQ's
Most of the banks in India provide you the option of foreclosing your loan against a securities account after the payment of the loan amount including the interest. A foreclosure charge will however be applied. However, the option of foreclosing your loan against security may differ from bank to bank.
Yes, your securities should be in the Demat form. In case you cannot pledge your securities in the Demat form, there are banks in India that offer you the option of pledging your securities held with any Depository Participant in NSDL or CDSL.
Yes, you can avail loan against security by converting your physical securities into a dematerialized form by opening a depository account with the lender.
The majority of lenders in India review your portfolio on a daily basis. However, an interim revaluation might be required.