The shares you hold can get you a loan

IT'S CHEAPER THAN A CREDIT CARD OR A PERSONAL LOAN

- Saikat Neogi

AS BANKS HAVE become cautious about unsecured lending, borrowers are increasingly seeking loans against collateral such as securities, bank deposits, and gold. Loan against securities grew 18% on-year in FY25, compared with 11.3% a year ago. The growth in gold loans was 103% in FY25, compared with 14.8% in FY24. In contrast, personal loan growth slowed down to 7.9% year-on-year in FY25, against 20.7% in FY24.

A loan against securities is usually structured as overdraft facilities, where interest is charged only on the amount utilized rather than the entire sanctioned limit. This offers better flexibility and cost control to the borrower. However, market-linked securities are prone to price volatility, and the lender will revalue the pledged securities at periodic intervals.