A valuable investment portfolio can create a difficult choice when an unexpected expense appears. Selling shares or mutual fund units raises cash, but may interrupt a long-term investment plan and trigger capital gains tax. A loan against securities (LAS) offers another route: pledge eligible investments to a bank or finance company and borrow against part of their value. Ownership ordinarily remains with the investor, although pledged holdings cannot be freely sold.
In 2026, LAS comes through traditional bank overdrafts as well as digital mutual-fund lending facilities. The crucial issue is the risk behind the convenience. A market fall can reduce borrowing power, forcing additional collateral, partial repayment or sale of pledged assets. Interest, renewal fees and pledging costs also differ. These established lenders have identifiable current products, but their order is not a cheapest-rate ranking.
Now, let’s check out the top 10 loan against securities providers in India.
What to Check Before Choosing
Eligible investments: Lenders accept only approved shares, mutual funds, bonds or other stated collateral, not every security in a portfolio.
Loan-to-value (LTV): Equity-backed borrowing typically permits a lower limit than debt-oriented funds. LTV differs by lender and approved asset.
Margin calls and fees: Compare utilised-balance interest, account charges, collateral review frequency and the time allowed to cure a shortfall.
1. HDFC Bank
HDFC Bank Loan Against Securities covers eligible shares and mutual funds, including a digital mutual-fund option. The bank advertises funding up to ₹1 crore on selected share and equity-fund facilities and specifies up to 50% of NAV for qualifying equity mutual funds. Check its approved list and whether your holdings qualify for online pledging. Best for: Existing customers seeking a digital bank route.
2. ICICI Bank
ICICI Bank LAS works as an overdraft, with interest calculated on the amount utilised. Approved investments include shares, mutual funds, ETFs, bonds and selected policies. The bank’s digital mutual-fund product advertises limits up to 50% of equity fund NAV and 80% of debt fund NAV, subject to caps and eligibility. Best for: Investors holding different approved assets.
3. Axis Bank
Axis Bank Loan Against Securities accepts specified shares, mutual funds and bonds. Its published collateral matrix distinguishes up to 50% LTV for shares from higher permitted limits on selected debt-oriented investments. Annual renewal, pledge and other charges should be compared before opening an overdraft. Best for: Borrowers wanting detailed collateral rules.
4. Kotak Mahindra Bank
Kotak LAS is an overdraft against eligible shares, mutual funds, bonds and certain insurance assets. The bank publishes fees and its lending-rate range, which is more useful than relying on a generic promotional price. Review the rate type, annual renewal requirements and approved securities before pledging. Best for: Investors comparing transparent fee schedules.
5. State Bank of India (SBI)
SBI YONO Loan Against Mutual Fund Units lets eligible customers seek an overdraft by marking a lien on qualifying equity or debt fund holdings. Its app-based steps explain selection, fee review and lien creation. This can be practical for investors with mutual funds but no substantial demat-share portfolio. Best for: SBI customers with eligible fund units.
6. Bajaj Finance
Bajaj Finance LAS serves holders of approved shares, mutual funds and bonds, with online account management. Its share product states borrowing up to 50% of eligible share value; limits for other assets differ. Large corporate-limit advertisements should not be confused with what an ordinary individual will be sanctioned. Best for: Borrowers considering specialist NBFC financing.
7. Tata Capital
Tata Capital Loan Against Securities includes online and WhatsApp-assisted service against approved shares, mutual funds and bonds. An important limitation: Tata Capital explicitly excludes Tata Group shares and does not offer this product against insurance policies. Verify both the approved security and margin clauses first. Best for: Applicants with larger eligible portfolios.
8. Bank of Baroda
BOB-PAL, the bank’s Portfolio-backed Approved Limit, covers qualifying shares, mutual funds, bonds and debentures. Its published price depends partly on borrower credit scores. The bank says this facility is intended for contingency needs, not investment speculation; its digital journey currently targets NSDL demat holders. Best for: Customers preferring public-sector lending.
9. South Indian Bank
South Indian Bank Loan Against Securities includes approved shares and mutual funds, with a dedicated digital loan-against-mutual-fund route. Investors can borrow without immediately selling their units, subject to portfolio eligibility and the bank’s loan documentation. Confirm the applicable rate and review cycle in the offer. Best for: Investors comparing a mid-sized bank.
10. CSB Bank
CSB Bank Loan Against Mutual Funds is a digital overdraft against accepted schemes. Its current website lists borrowing from ₹50,000 to ₹1 crore and publishes processing, annual maintenance, pledge and release charges. The full schedule matters because fixed fees can be significant on smaller loans. Best for: Fund investors comparing the true all-in cost.
Smart Selection Tips
- Borrow conservatively: Using the entire drawing limit leaves little protection if markets fall suddenly.
- Plan principal repayment: Interest-only overdrafts are not free money; account limits may expire or require renewal.
- Avoid leveraged trading: Using pledged investments to buy more shares can compound losses and may breach loan-purpose rules.
- Compare redemption costs: If you need cash permanently, a taxable sale can still be cheaper than paying years of loan interest.
Conclusion
LAS can offer short-term cash without immediately selling investments, but it remains secured borrowing exposed to market volatility. Compare full costs, pledged-asset restrictions and margin terms before signing.
FAQs
Q1. Can pledged shares be sold during a sharp market fall?
Yes. If collateral falls below the required margin and you do not restore it in time, the lender may invoke the pledge and sell securities according to the agreement.
Q2. Do I still receive dividends on pledged shares?
Usually ownership and applicable economic benefits remain with you while the securities are pledged, but selling and transferring them are restricted.
Q3. Can I borrow against locked-in ELSS units?
Do not assume so. The three-year statutory lock-in and a lender’s eligible-scheme rules may prevent pledging or utilisation. Get specific confirmation.
Q4. Is interest charged on the entire limit?
Most LAS overdrafts charge interest on the utilised balance, but sanction, renewal and lien fees may apply regardless of withdrawals.
Q5. Does pledging trigger capital gains tax?
A standard pledge is generally not the same as a sale. Redemption or invocation of collateral can produce tax consequences, depending on the transaction.
