Check your eligibility
What These Loans Fund
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A limit against approved listed sh...
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Overdraft structure against the sa...
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Any lawful end use
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Continued dividends and corporate...
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Additional securities may be pledg...
Who Can Consider This Loan?
- Ownership of the assets being pledged, in your own name
- Assets on the lender's approved list of pledgeable securities
- Minimum holding value set by the lender
- KYC completed with the lender
- For insurance policies, a policy that has acquired surrender value
What May Not Be Funded?
- Securities not on the lender's approved list
- Unlisted shares and illiquid counters
- Holdings above the lender's single-stock concentration limit
- Securities in a minor's name or under lock-in
- Speculative trading, which lenders prohibit
Always check the sanction letter before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading loans companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced loans professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
A loan against securities pledges listed shares, bonds or exchange-traded funds in your demat account in exchange for a credit limit. The securities stay in your name, continue to receive dividends and corporate benefits, and are not sold.
Lenders maintain an approved list of securities and apply a haircut to each. Large, liquid stocks attract a higher funding percentage; small caps and illiquid counters attract much less or are excluded entirely. Concentration limits also apply, so a portfolio in a single stock will not be funded like a diversified one.
Margin risk is the defining feature. If the value of the pledged securities falls below the required ratio, the lender can demand additional securities or repayment, and can sell the pledged holdings if you do not respond. That risk is real and it materialises during market falls, when you are least able to meet it.
Who should consider it
Investors with a substantial portfolio of listed securities needing short-term liquidity. Business owners bridging a cash gap without disturbing long-term holdings. Investors who would otherwise sell at an inopportune moment.
It is not appropriate for someone whose entire net worth is in one or two volatile stocks, where a margin call is a realistic near-term possibility.
Benefits
- Liquidity without selling, so no capital gains event
- Dividends and corporate benefits continue to accrue to you
- Rates well below unsecured borrowing
- Overdraft structure with interest only on what is drawn
- Fast processing against demat holdings
- The portfolio stays invested through the borrowing period
What the loan funds, and what it does not
Read the right-hand column first. It is the one that decides how much you have to arrange yourself.
Usually funded
- A limit against approved listed shares, bonds and ETFs
- Overdraft structure against the sanctioned limit
- Any lawful end use
- Continued dividends and corporate actions on pledged holdings
- Additional securities may be pledged to increase the limit
Usually not funded
- Securities not on the lender's approved list
- Unlisted shares and illiquid counters
- Holdings above the lender's single-stock concentration limit
- Securities in a minor's name or under lock-in
- Speculative trading, which lenders prohibit
- Sale of pledged securities while the lien is active
Funding limits and the treatment of add-ons vary between lenders and move with the borrower profile. The sanction letter you receive is what governs — we will walk you through it before you sign.
How it works with us
- 1 We look at what you already hold Mutual funds, deposits, shares, bonds and policies. Most people needing a personal loan are holding something cheaper to borrow against.
- 2 Eligible value calculated after haircut Lenders lend a percentage of market value, and the percentage varies sharply by asset. That number decides what you can raise.
- 3 Lien or pledge marked The asset stays yours and keeps earning. A lien is recorded so it cannot be sold while the loan runs.
- 4 Limit sanctioned, usually as an overdraft You draw what you need and pay interest only on that. For an uncertain need this is far cheaper than a term loan.
- 5 Margin monitored while the loan runs For market-linked assets we flag it if a fall approaches a margin call, so you are not surprised by one.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- Margin calls are the real risk and they arrive during market falls. Borrow well below the maximum so a normal correction does not trigger one.
- Check the approved list before assuming your portfolio qualifies. Small caps and illiquid counters are frequently excluded entirely.
- Concentration limits mean a portfolio in one or two stocks funds far less than a diversified one of the same value.
- Never use this to fund further market positions. Borrowing against securities to buy more securities magnifies both directions, and the margin call mechanics make the downside worse.
- Keep the loan short and modest. This is a bridging tool, not a way to run permanent leverage against your portfolio.
Documents required
- Identity proof — Aadhaar, PAN or passport
- Address proof
- Statement of holdings for the assets being pledged
- Demat account details, for shares and bonds
- Policy documents, for loans against insurance
- Fixed deposit receipts, where applicable
- Bank account details for disbursal
Frequently Asked Questions
Do I keep my dividends?
Yes. The securities remain in your name and dividends, bonus issues and other corporate benefits continue to accrue to you. Only a lien is marked; ownership does not change.
How much can I borrow against shares?
Typically around fifty per cent of the value of approved equity holdings, with bonds funded at a higher percentage. The haircut reflects volatility, and small caps and illiquid stocks are funded much less or excluded.
What happens if the market falls?
If the value of your pledged securities drops below the required ratio, the lender issues a margin call — asking for additional securities or partial repayment — and can sell the pledged holdings if you do not respond. Borrowing well below the maximum limit is the practical defence.
Are all my shares eligible?
No. Lenders maintain approved lists, and small-cap and illiquid counters are frequently excluded. Concentration limits also apply, so a portfolio held in one or two stocks funds far less than a diversified one of the same value.
Can I use it to buy more shares?
Lenders prohibit it, and it is a poor idea regardless. Borrowing against securities to buy more securities magnifies losses as well as gains, and the margin call mechanics turn an ordinary correction into a forced sale.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.