InvestorQ : Can I as an investor get a loan against my shareholdings?
Mahil Khan made post

Can I as an investor get a loan against my shareholdings?

Answer
user profile image
2 years ago


There are NBFCs that do offer Loan Against Shares. Typically, you can expect a maximum loan of up to 50% of the current value of the shares you wish to pledge. The interest rates and all can depend upon what shares and to what value you seek as a loan.


user profile image
2 years ago


To begin with, I am assuming that your shares are in demat mode and you are holding the shares in your demat account. You need a clear balance before borrowing against your shareholdings. There is something called pledging of shares. Yes. Pledging dematerialized securities is easier and more advantageous as compared to pledging physical securities. Here is how you can go about pledging your shares and getting a loan against it.
The procedure to pledge electronic securities is as follows:
Both BOs, investor (pledgor) and the lender (pledgee) must have BO account with the same depository, only then the pledge will be possible. Pledgor will have to instruct DP to create a pledge in prescribed standard form (Pledge Request Form) with the details of the securities clearly mentioned in the form.
The lender (pledgee) has to confirm the request through his/her DP. Once this is done, securities are pledged.
All financial transactions between the pledgor and the pledgee are handled as per normal practice outside the depository system. After the repayment of a loan, pledgor can request for a closure of pledge by instructing the DP in a prescribed format. The pledgee on receiving the repayment will instruct his DP accordingly for the closure of the pledge. It is a mutual agreement and has to be closed by mutual consent only.