Everything You Need to Know About Loan Against Shares
You invested in shares for a reason. Maybe it's a goal a few years away. Maybe you just want to stay invested and let your money grow.
But life doesn't always follow the plan. A medical bill. A business need. An expense that can't wait.
You need money, but you don't want to sell your shares.
You’re not alone. According to SEBI’s Investor Survey 2025, 74% of investors who had lapsed from the securities market cited changes in their personal goals or priorities as a reason. An urgent need for funds was part of that.
Selling is the easiest route. It also means letting go of investments you meant to hold.
What if you could get the money you need without selling?
That’s where a Loan Against Shares comes in. You pledge eligible shares as collateral and borrow against their value, while the shares remain yours.
How does it work? How much can you borrow? What happens if prices fall? What does it cost? Let's walk through it.
What Is a Loan Against Shares?
A Loan Against Shares is a secured loan. Your eligible shares act as collateral. The lender assigns a loan value to them based on their market value and the applicable Loan-to-Value (LTV) ratio.
The shares stay in your demat account and are marked as pledged for the duration of the loan. You can borrow up to the eligible amount and repay as per the terms of the facility. You get access to funds without liquidating your investment.
Who Offers a Loan Against Shares?
Banks, RBI-registered NBFCs and fintech platforms all offer it, each in a different role.
- Banks often already have a relationship with you. The process may involve branch visits, more documentation and longer turnaround times.
- NBFCs typically offer a more streamlined process with digital onboarding. Loan terms can vary based on your profile and the shares you pledge.
- Fintechs generally act as a digital interface and work with partner banks or NBFCs. With a third party in the journey, look at the total cost of borrowing, including interest and fees. A digital process does not automatically mean a lower-cost loan.
Who Can Avail a Loan Against Shares?
It is available to resident Indian individuals who meet the lender's criteria and hold approved shares in a demat account
For Mirae Asset Financial Services, you need to:
- Be a resident Indian individual
- Be 18 years or older at the time of loan approval, and not more than 75 years at the time of final repayment
- Have a valid PAN and Aadhaar
- Hold a CDSL or NSDL demat account
- Hold shares approved under MAFS's eligibility criteria
- Have a valid mobile number, email ID and a bank account with internet banking access
Your shares must also be on the lender's approved securities list. Owning shares alone does not make you eligible.
How Does a Loan Against Shares Work?
Let's walk through an example.
Ms. Priya pledges shares worth ₹8,00,000. At an LTV of 45%, she gets a loan limit of ₹3,60,000.
- On Day 1, she withdraws ₹1,50,000 for a medical expense.
- On Day 10, she withdraws another ₹1,00,000.
Interest is charged only on the amount withdrawn. From Day 1 to Day 10, it applies on ₹1,50,000. From Day 10 onwards, it applies on ₹2,50,000.
- On Day 20, she repays ₹1,00,000. Her outstanding drops to ₹1,50,000, and interest applies only on this amount.
- On Day 30, she depledges shares worth ₹1,00,000. Her pledged value falls to ₹7,00,000, and her limit is revised to ₹3,15,000 (45% of the new value).
Loan Snapshot
| Day | Value of Pledged Shares | Loan Limit | Utilized Amount | Available Limit | Accumulated Interest (@10.25% p.a.) |
|---|---|---|---|---|---|
| Day 1 | ₹8,00,000 | ₹3,60,000 | ₹1,50,000 | ₹2,10,000 | ₹0 |
| Day 10 | ₹8,00,000 | ₹3,60,000 | ₹2,50,000 | ₹1,10,000 | ₹379 |
| Day 20 | ₹8,00,000 | ₹3,60,000 | ₹1,50,000 | ₹2,10,000 | ₹1,081 |
| Day 30 | ₹7,00,000 | ₹3,15,000 | ₹1,50,000 | ₹1,65,000 | ₹1,502 |
By Day 30, Priya's accumulated interest is ₹1,502. She can repay the principal as per the facility terms, and she can pledge more shares at any time to raise her limit.
What Happens When the Value of Pledged Shares Drops?
Share prices move every day. Since the loan is secured against them, a fall in value can reduce your eligible limit. At Mirae Asset Financial Services, pledged securities are revalued daily to arrive at the revised limit.
If your outstanding loan exceeds the revised limit, you may receive a margin call.. You then need to bring your LTV back within the applicable limit. How much time you get depends on how far the LTV has moved.
Take Priya. Say she had used her full ₹3,60,000 limit, and her pledged shares fell from ₹8,00,000 to ₹7,00,000. Her LTV is now about 51%. That falls in the 5 working days band below.
| LTV Range | Time to Regularise |
|---|---|
| More than 45% to 50% | Up to the 45th overdue day |
| More than 50% to 55% | 5 working days |
| More than 55% to 60% | 4 working days |
| More than 60% to 65% | 2 working days |
| More than 65% | By 2:00 PM on the next working day |
If the account is not regularised within the timeline, the pledged securities may be liquidated as per the stipulated process.
How to Apply for a Loan Against Shares
You can apply through the web or app. At Mirae Asset Financial Services, it takes 6 steps:
- Download the app on your mobile or apply via the web
- Select the shares you want to pledge from your eligible holdings
- Complete your KYC with PAN and Aadhaar (details can be fetched from DigiLocker if your Aadhaar is linked to your mobile number)
- Pledge your shares through the CDSL/NSDL process and authorise the pledge request
- Verify your bank account and set up the e-mandate
- Read and sign the loan agreement online
Loan Against Shares Interest Rates and Charges
Interest rates vary across lenders, and a processing fee is usually charged as a percentage of the loan amount.
At Mirae Asset Financial Services, Loan Against Shares is available at 10.25% p.a. Interest is charged only on the amount you utilise, for the days you use it. A higher limit you don't draw on doesn't attract interest. The processing fee depends on the tenure: ₹999 for 1 year, ₹1,299 for 2 years and ₹1,499 for 3 years.
If you miss an interest or principal payment, charges such as bounce fees or penal interest may apply.
Digital vs Traditional Loan Against Shares
The idea is the same in both. Eligible shares are pledged as security. What changes is how you get there.
A traditional loan may involve branch visits, physical documents and several rounds with the lender. A digital one moves application, KYC, bank verification, pledge and e-signing online.
| Process | Traditional Loan Against Shares | Digital Loan Against Shares |
|---|---|---|
| Application | Branch or physical process | Online via app or web |
| Documentation | Physical paperwork may be involved | Digital documentation and e-sign |
| KYC | Physical or assisted verification | Digital KYC |
| Share pledge | Assisted/manual process | Digital pledge through the depository |
| Loan servicing | Branch or assisted channels | App/web-based servicing |
At Mirae Asset Financial Services, the full journey is available on the mobile app and web.
Is a Loan Against Shares Right for You?
It helps when you need funds and don't want to sell. You get access to money, and you keep your investments.
It is not the right fit for every need. It suits temporary or short- to medium-term requirements better than long-term commitments such as buying a home. If the pledged shares fall significantly, you may need to bring the loan back within the applicable LTV limit.
Before you take one, ask three things. What is the purpose? How long do you need the funds? Can you repay without relying on your shares rising in value?
Used for the right need, it gives flexibility. It should not replace appropriate long-term financing.
Things You Should Know About Loan Against Shares
Your limit is linked to the value of the shares pledged and the applicable LTV. Pledging additional eligible shares may increase it, subject to the lender's criteria. If the market value of your pledged shares falls, your limit can come down.
A Loan Against Shares lets you borrow against shares you already own. MTF, or Margin Trading Facility, helps you buy new shares by paying part of the cost while your broker funds the rest.