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Loan Against Shares: Don’t Sell Your Stock Portfolio, Pledge It Instead!

Get quick and easy money against your listed equity holdings online.

Be a smart investor and hold on to your shares. Enjoy access to a secured borrowing facility intended for flexibility and convenience, online.

  • Quick Approval
  • Keep Earning Returns
  • Interest Only On Utilised Amount
  • 50+ Years of Shriram Group's Legacy

Loan Against Shares is coming soon.

Applicable LTV
50%
Age
18–70 years
Disbursal time
Quick Approval

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What Is Loan Against Shares?

Loan Against Shares is a loan in which you pledge your eligible demat-held equity shares as collateral and borrow against their value.

You retain ownership of the shares, subject to the security interest, while repaying the amount used with applicable interest.

In simple terms, Loan Against Shares is a secured borrowing limit against an eligible share portfolio. The lender evaluates the approved securities, applies the relevant loan-to-value (LTV) ratio, and sanctions a limit.

You can then withdraw funds within that limit, subject to the facility terms.

What Is the Difference Between Pledging and Selling?

When you need funds, selling your shares and pledging them serve two very different purposes. Pledging is when you borrow against your eligible shares without selling them while, selling is when you exit your investment. A detailed explanation has been provided in the table below.

Pledging your shares against selling them

Ownership
Pledging Your Shares: Retained in full throughout the loan tenure
Selling Your Shares: Surrendered permanently
Future Upside
Pledging Your Shares: Keeps compounding, allowing continued growth
Selling Your Shares: Forgone entirely
Dividends and Bonuses
Pledging Your Shares: Continues to accumulate
Selling Your Shares: Ceases immediately
Capital Gains Tax
Pledging Your Shares: No tax event when pledging - arises only if the shares are later sold or invoked
Selling Your Shares: May trigger an immediate liability

Loan Against Shares is best suited for investors:

  • Who Have a Reasonably Diversified, Liquid Equity Portfolio
  • Who Require Funds for a Defined Period

It is often faster to arrange these funds than a conventional loan because the facility is priced against your shares, not just your income or credit history, and since you are borrowing against an asset you plan to keep anyway, it rarely disrupts a longer-term investment plan the way an outright sale would.

What Are the Features and Benefits of a Loan Against Shares?

Our Loan Against Shares facility is built around one idea: turn an existing investment portfolio into a flexible source of secured credit without requiring you, the investor, to exit the market.

Here are the features and key benefits of our Loan Against Shares.

Features

  • Interest Only on Amount Utilised

    Interest is charged only on the amount utilised, rather than the entire sanctioned limit.

  • Wide Range of Eligible Securities

    The approved securities list spans a broad range of large-cap and select mid-cap stocks across sectors.

  • Shares Remain in Your Demat Account

    Your pledged shares continue to remain in your demat account, subject to the pledge and terms of the loan.

  • Enhanced Borrowing Capacity*

    Borrow against the eligible value of your pledged shares and utilise the attractive Loan-to-Value (LTV) ratio determined according to the regulatory requirements and lender’s policies.

  • Transparent Charges and Terms

    Applicable interest, processing fees, and other charges are communicated upfront, helping you understand the overall cost of borrowing.

  • Flexible Repayment Structure

    The facility allows flexible repayment options – EMI and Balloon repayment, so you can structure the repayment as per your cash flow.

*Applicable LTV is subject to regulatory requirements, eligible securities, and the lender's prevailing policy.

When Should You Use a Loan Against Shares?

Selling an investment built over years should not be the first choice when funds are needed urgently. Loan Against Shares provides a solution by offering access to funds for a defined period, supported by a clear repayment plan. Instead of liquidating investments to meet financial needs, you can pledge eligible shares and obtain credit within the approved limit.

Common Use Cases

The funds can be utilised for requirements such as:

  • Property Down-Payment

    Cover the gap between arranging a down payment for purchasing property and receiving funds from elsewhere, without liquidating your equity portfolio at an inconvenient moment.

  • Funding an Education Goal

    Tuition deadlines don’t wait for a loan approval, particularly for semester-wise fees, study-abroad costs, or coaching programmes with fixed cut-off dates. Loan Against Shares lets you meet that deadline immediately, rather than liquidating a portfolio built for an entirely different goal, such as retirement or a future home.

  • Meeting a Medical Emergency

    Hospitalisation, a sudden diagnosis, or an unplanned procedure gives no notice, and the bills that follow are due immediately. Since interest is charged only on the amount withdrawn, repayment can wait until the immediate pressure has eased.

  • Bridging an Emergency Fund Gap

    Access funds quickly and repay once you get the funds back - either as a lump sum amount or a monthly systematic investment plan (SIP), instead of breaking a long-term investment early.

When Not to Use Loan Against Shares?

Loan Against Shares should not be used for open-ended consumption or for long-term expenses without a clear repayment plan.

Additionally, it may not be appropriate if your portfolio is heavily invested in volatile small or mid-cap stocks, as a decline in their value could heighten the risk of a margin call.

Before using Loan Against Shares for an investment opportunity, ask these three questions:

  • Is the expected return reasonably aligned with the borrowing cost?
  • What is the repayment source if the investment underperforms?
  • Can you meet a margin call without selling other assets at an unfavourable time?

If the answers are unclear, borrowing may increase financial risk rather than solve the underlying funding need.

Loan Against Shares Calculator

Want to Borrow

Interest a yearTenure 12 Months
You Could Borrow Up To₹7,00,000For a ₹10,00,000 Portfolio
Borrowing ₹7,00,000 for 12 months at 9.5%* p.a.
Interest Only
Each Month₹6,563
Total Interest₹2,36,250
Total Repaid₹9,86,250
Your investment after 12 months₹11,20,000
Portfolio if you Pledge ₹11,20,000Portfolio if you Sell ₹3,36,000
You Retain By Not SellingAssumes your investments grow at 12% a year and you pay interest only, after everything repaid. Exit load and capital gains tax on redeeming are not taken off.₹67,446
You retain ₹9,750Interest paid ₹8,250

What Happens During a Margin Call on a Loan Against Shares?

A margin call occurs when a fall in the market value of your pledged shares causes the LTV ratio to move beyond the permitted level.

In such a scenario, you have to restore the required margin within the stipulated period.

How Can You Respond?

Here are a few ways you can respond:

  • Pledge Additional Approved Shares

    Add eligible securities to strengthen the collateral cover.

  • Part-Repayment

    Make a partial repayment of the outstanding amount to bring the balance back within the limit.

  • Substitute Securities, Where Permitted

    Replace lower-value or less suitable shares with higher-value approved securities already in your portfolio, subject to the guidelines.

If the required correction is not made within the applicable cure period, the pledge may be invoked and sufficient securities sold to recover dues or restore the required collateral cover, subject to the loan agreement and applicable law.

How to Reduce Margin Call Risk?

A margin call risk can be reduced by:

  • Keeping a buffer below the maximum LTV
  • Diversifying pledged equity across sectors and market caps and avoiding pledging portfolios heavily weighted toward small- or mid-cap stocks, which are more volatile
  • Reviewing your portfolio value regularly rather than only when prices move sharply
  • Setting price alerts on your key holdings so a decline never catches you unaware
  • Not assuming that an approved limit will remain unchanged as market prices move.

What Is the Cure Period?

  1. A cure period is the time period given by a lender to you after issuing a margin call to restore your Loan Against Shares within the permitted LTV ratio.

  2. It starts the moment a margin call is triggered, and it ends either when you have restored the required ratio - by pledging more shares, making a partial repayment, or a combination of both - or when the window lapses without resolution, at which point the lender can sell enough of your pledged shares to bring the LTV back into line.

  3. The exact response period is determined by the applicable regulatory framework and other terms. The applicable cure period and action required will be communicated as per the loan terms and prevailing regulatory requirements.

Note Contact the lender promptly if your collateral value changes materially or you anticipate difficulty in restoring the required margin. A margin call is a risk-control mechanism, not an indication that the investment itself has become unsuitable.

Do not assume that a margin call can be ignored until the next statement cycle.

Who Is Eligible for a Loan Against Shares?

Any Indian investor with an active demat account and eligible listed shares can apply for a Loan Against Shares, subject to minimum portfolio value, standard KYC checks, and lender’s credit and security requirements.

Shriram Credit Requirement

Nationality
Resident Indian
Age
18–70 years
Borrower Type
Salaried individuals, self-employed professionals, and business owners, provided they meet the applicable criteria
KYC
Must be KYC-compliant (Aadhaar + PAN)
Demat Account
Must have an active demat account with CDSL or NSDL
CIBIL Score
No Credit Score Required

What Documents and KYC Are Required?

Identity Proof
PAN, Aadhaar, or passport
Address Proof
Utility bill, Aadhaar, or passport
Income Proof
Salary slips/ITR
Demat Holding Statement
Last 3 months
Bank Statement
Last 6 months
Photograph
Recent passport-size photo

The application is designed to be straightforward, with documentation based on your profile and the securities being pledged.

Note Depending on the applicant and facility, the lender may also request additional income/ownership proof, employment or business details, income-tax documents, or other information needed in accordance with its KYC and credit policies.

Who May Not Be Eligible?

  • Minors
  • Applicants holding physical rather than demat securities
  • Applicants whose securities or ownership structure fall outside the lender’s approved policy.
  • Promoters or directors seeking to pledge shares of their own company. NRI applications, where available, are subject to separate eligibility and regulatory requirements.

The lender may also assess the purpose of borrowing, repayment capacity, existing obligations, and the quality and concentration of the pledged portfolio.

Meeting a stated minimum CIBIL score or portfolio threshold therefore does not create an automatic right to credit.

Eligibility does not guarantee sanction. The final decision depends on the applicant profile, credit assessment, eligible collateral, and applicable policy, at the time of application.

Loan Against Shares vs Other Borrowing Options

The right borrowing option depends on whether you have eligible collateral, how quickly you need funds, and how you plan to repay them. Loan Against Shares typically costs less than a personal loan, is secured, requires no separate collateral if you already hold shares, and lets your investment keep growing.

Here's how a Loan Against Shares compares with a few alternatives commonly considered by Indian borrowers.

Personal Loan

Loan Against Shares and Personal Loan

How it works?
Eligible shares are pledged as security against the loan
Funds are borrowed without any collateral
Collateral
Eligible listed shares
None
Interest rate
Low, linked to LTV
High, unsecured pricing
Disbursal time
Quick Approval
1–7 days
Access to funds
Overdraft facility
Usually lump sum
Asset retention
Yes - Ownership of the shares stays with you
N/A
Margin call risk
Yes, if share value falls
None
Pre-payment penalty
Zero Penalty
Often applies
Tax Treatment
No tax event during pledge; it is applicable if the pledge is invoked and the shares are sold
Loan proceeds are typically not taxable
Impact on Investment
Shares remain invested and continue providing returns/dividends
None
Suitable for
Investors seeking short-term secured funds, while retaining ownership of eligible shares
Borrowers seeking unsecured funding for personal requirements

  • Loan Against Shares

    How it works?
    Eligible shares are pledged as security against the loan
    Collateral
    Eligible listed shares
    Interest rate
    Low, linked to LTV
    Disbursal time
    Quick Approval
    Access to funds
    Overdraft facility
    Asset retention
    Yes - Ownership of the shares stays with you
    Margin call risk
    Yes, if share value falls
    Pre-payment penalty
    Zero Penalty
    Tax Treatment
    No tax event during pledge; it is applicable if the pledge is invoked and the shares are sold
    Impact on Investment
    Shares remain invested and continue providing returns/dividends
    Suitable for
    Investors seeking short-term secured funds, while retaining ownership of eligible shares

  • Personal Loan

    How it works?
    Funds are borrowed without any collateral
    Collateral
    None
    Interest rate
    High, unsecured pricing
    Disbursal time
    1–7 days
    Access to funds
    Usually lump sum
    Asset retention
    N/A
    Margin call risk
    None
    Pre-payment penalty
    Often applies
    Tax Treatment
    Loan proceeds are typically not taxable
    Impact on Investment
    None
    Suitable for
    Borrowers seeking unsecured funding for personal requirements

A Practical Way ForwardThe right choice depends less on which product is "best" or offers the lowest interest rate but more on what you are funding, for how long, and what you are prepared to put at risk. The lowest interest rate should not be the only consideration.

What Are the Tax Implications of Loan Against Shares?

Taking a loan against shares does not trigger tax unless you are selling the shares. Hence, the way you use your borrowed funds, decide the implications of tax on your Loan Against Shares. The tax outcome may also depend on whether the transaction is conducted by an individual, a business, or another type of taxpayer.

Pledging Is Not a Sale by Itself

The creation of a pledge over shares is generally not a transfer that triggers capital gains tax because it is not a sale or transfer under Income Tax law.

Capital Gains Tax on Sale or Invocation

Sale or invocation may trigger capital gains tax. Any gain arising from sale of pledged shares including after invocation is taxed under relevant capital gains rules. For listed equity transactions subject to the relevant conditions, current tax rules provide for 20% short-term capital gains and 12.5% long-term capital gains, with the applicable ₹1.25 lakh annual exemption under Section 112A for qualifying long-term gains.

Interest Is Not Automatically Deductible

Interest on a personal Loan Against Shares facility is not generally deductible. Where borrowed funds are used for an eligible business purpose, the interest may qualify as a business expenditure subject to the applicable provisions and conditions.

Dividends Remain Taxable

Dividends received by the investor continue to be taxable according to the applicable Income Tax rules, even while securities are pledged.

Factors such as the classification and holding period of the shares, Securities Transaction Tax (STT) regulations, and other statutory requirements can influence the final tax calculation.

Note Tax laws and rates can change. Before making a decision, consult a qualified tax adviser and review the applicable rules.

What Is the Regulatory Framework for Loans Against Shares?

Loan Against Shares is right in the middle of regulated lending and the securities market. Understanding the framework helps you distinguish a genuine pledge-based facility from an outright transfer of securities.

LTV and Lending Safeguards by RBI

For a non-banking financial company (NBFC) lending against the collateral of listed shares, RBI’s framework requires a 50% LTV ratio to be maintained. A fall in share prices can therefore reduce the borrowing headroom and may require the borrower to restore the required cover.

RBI has also prescribed safeguards around reporting and eligible collateral for such lending.

SEBI and Depository Pledge Mechanism

Securities pledging is carried out through the regulated depository framework. CDSL and NSDL provide electronic facilities for pledge-related instructions, helping create an auditable process rather than relying on physical share certificates.

Why Does the Mechanism Matter?

In a pledge-based arrangement, the securities remain in the investor’s demat account, subject to the pledge. The investor does not simply hand over physical certificates to the lender.

If the borrower defaults or fails to cure an applicable margin shortfall, invocation and sale can take place in accordance with the facility terms and applicable regulatory requirements.

Note Regulatory requirements can evolve. The applicable RBI directions, SEBI circulars, depository procedures, and the lender’s current policy should always be checked before taking a facility.

Best Practices for Managing Your Loan Against Shares

A Loan Against Shares works best when the borrowing is planned, the collateral is diversified, and the repayment source is visible. Getting the most from it comes down to discipline as much as access.

Five Things to Do:

Keep an LTV Buffer

Do not treat the maximum sanctioned limit as a target. A lower utilisation level gives your collateral more room to absorb market movements, so it doesn't trigger a margin call.

Diversify Pledged Securities

A portfolio concentrated in a few volatile shares can experience sharper changes in collateral value. Hence, spreading a pledge across sectors and market caps softens the impact of any single stock's decline.

Monitor Your Portfolio Regularly

Check the value of your pledged portfolio and available drawing power rather than waiting for a lender notification. A quick weekly check catches a developing shortfall long before it becomes a margin call.

Use Loan Against Shares for Short-Tenure Needs

Match the facility to a requirement with a reasonably clear repayment timeline. This product is priced and structured for near-term liquidity, not multi-year borrowing.

Repay From the Planned Source

Whether it is a maturing Fixed Deposit, an invoice payment, or a bonus, repaying from the intended source keeps the facility working the way it is meant to.

Five Mistakes to Avoid:

Withdrawing the Full Limit

A small market correction or a modest price dip can trigger a margin call almost immediately

Pledging Only Volatile Scrips

Higher price swings can increase margin-call risk

Ignoring a Margin Call Notice

Delayed action can result in further corrective measures under the facility terms

Using Loan Against Shares for Long-Term Consumption

Interest costs can accumulate when a short-term facility is kept outstanding without a clear exit plan

Not Tracking Portfolio Value

The single biggest reason borrowers are caught off guard by a margin call is simply not watching the number that matters.

The objective is not to maximise borrowing. It is to use secured credit conservatively while keeping your investment strategy and repayment plan aligned.

Keep the Borrowing Purpose Clear

Before withdrawing funds, record why the money is being borrowed, along with the expected source and date of repayment. This simple discipline helps distinguish productive short-term borrowing from spending that can become difficult to repay.

Recheck the cost if the facility remains outstanding longer than planned, and do not increase borrowing merely because additional drawing power becomes available.

If market conditions change sharply, prioritise maintaining the required collateral cover and meeting repayment obligations over maximising portfolio exposure.

Get Assistance

Got Questions?

The amount depends on the market value and eligibility of your shares, the applicable LTV, and the lender’s credit assessment. For NBFCs lending against listed shares, the regulatory LTV framework is 50%.

Eligibility depends on the lender’s approved scrip list, liquidity, market characteristics, regulatory requirements, and internal risk policy.

No. A pledge creates a security interest; it is not the same as selling the shares. The shares remain in your demat account subject to the pledge.

If the share price falls and the permitted LTV is breached, you may receive a margin call requiring pledging of additional collateral or partial repayment.

The calculation frequency and billing method depend on the facility terms. Where interest is based on utilised funds, the amount and period of utilisation determine the interest payable.

You can request closure or pre-payment through the lender’s prescribed process. Once all applicable dues and conditions are satisfied, the pledge can be released through the depository mechanism.

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