What are loan against securities (LAS)?
Loan against securities is a loan where you pledge your shares, mutual funds or life insurance policies as collateral to the bank against your loan amount.
How do loans against securities work?
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. Let’s say, you draw Rs 50,000 and deposit the amount back in your account in one month. In this case, you are liable to pay interest only for one month on Rs 50,000.
The amount of loan you are eligible for depends on the value of the securities you offer as collateral
What is digital loan against securities?
A pathbreaking new product in this space is HDFC Bank’s Digital LAS, which automates and significantly speeds up the process of getting a loan against shares in just 3 simple steps. Thanks to Digital LAS, you can now get a loan in less than 3 minutes . The process is completely online, and you don’t even have to step out of your office or home.
1. Login to HDFC Bank NetBanking, and choose the shares to pledge
2. Accept agreement through a one-time password (OTP)
3. Pledge shares with National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL) online by confirming OTP
Benefits of Digital Loan Against Securities
- Instant disbursal if you apply via NetBanking
- Pay interest only on the amount you use
- Low-interest rate and processing charges
- Set your own loan limits (minimum Rs 1 lakh and maximum Rs 20 lakh)
- No need to submit any documents
- Choose the shares and mutual funds you want to pledge, and enjoy the flexibility to change them in the future
- No prepayment penalty
- High loan to collateral value