Loan against share is offered against listed securities. Investors can borrow funds against existing investment portfolios to meet investment and liquidity requirements. The money that the borrower has invested in can get him a loan.
Accordingly, can NBFC pledge its shares?
Currently, NBFCs lend by asking promoters to pledge shares in their favour, or transfer shares to their account or by obtaining a Power of Attorney (PoA) on the demat account of the borrower.
Considering this, what is the minimum and maximum loan amount for shares? One can avail of a minimum loan of Rs 1 lakh and a maximum of Rs 10 lakh for physical shares, and up to Rs 20 lakh for demat shares. The initial tenure is normally a year, but can be taken up for renewal at the end of this period. One can only pledge shares that feature in the bank’s approved list.
Keeping this in consideration, how can I get a loan against securities?
Loan Against Securities are typically offered as an overdraft facility in your account after you have deposited your securities. You can draw money from the account, and you pay interest only on the loan amount you use and for the period you use it. For example, you are offered a loan against shares of Rs 2 lakhs.