New Delhi: Whenever there is an emergency, loan plays a very important role for us. As soon as we think of loan, the first thing that comes to mind is personal loan. But, investors who invest in the stock market do not know about loan against stock. Yes, you can also take loan against shares. This is also a kind of financial tool through which you can meet your expenses. We will tell you about this below.

What is Loan Against Share (LAS)

In Loan Against Share (LAS), the investor is given a loan in a secured manner. Many banks and non-banking financial companies (NBFCs) of the country provide this facility. In this, the loan amount is limited to 50 percent of the market value of the shares. However, even after taking this loan, the investor retains ownership rights over his shares.

When the investor has taken a loan and is getting dividend at that time, the investor gets its benefit. In this loan, the lender only marks the shares in the demat account as pledge. Apart from this, if the investor wants, he can get the loan as a one-time amount or overdraft. This option gives flexibility to the borrower.

These documents are necessary

PAN Card and Aadhaar Card for KYC documents

Demat Account Statements

Bank statements, salary slips, IT returns for age proof

What is the eligibility criteria

Loan against shares is available only to those investors who are shareholders of the companies listed by the lender. Many institutions also provide loan facility against other securities like mutual funds or bonds.

These are the terms and conditions

In this, the interest rate is much lower than that of a personal loan. The tenure of this type of loan is one to three years. In this, flexible repayment means the borrower can pay the interest along with the payment of the loan amount.