How Digital NBFCs Are Transforming Loan Against Securities

In recent years, the way we handle money and investments has changed a lot. More people are investing in mutual funds, shares, and bonds. But did you know that you don’t have to sell these investments when you need money? Thanks to something called Loan Against Securities, now you can get funds by just pledging your investments — and NBFCs are making this process super easy.

What Is Loan Against Securities?

Loan Against Securities (or LAS) is a type of loan where you can borrow money by using your financial investments as security. These investments could be shares, mutual funds, bonds, ETFs, or even gold bonds. The best part? You still own your investments — you’re just using them as a way to get a loan.
Earlier, getting this kind of loan took time and paperwork. But now, some new-age NBFCs (Non-Banking Financial Companies) are using technology to make LAS fast, simple, and digital.

1. Loan Against Mutual Funds Is Also Growing

 A popular part of LAS is Loan Against Mutual Funds (LAMF). Many people invest in mutual funds these days through SIPs. With LAMF, you can borrow money while your mutual fund investment continues growing. It’s helpful if you have short-term needs like medical bills, education expenses, or even business use — and you don’t want to break your investment.

2. How Are NBFCs Making LAS Easier?

Some NBFCs are now fully digital and don’t ask you to visit a branch. Here’s what they’re doing:

• You can apply online and get the loan approved in a few hours.
  
  

• You don’t need to give physical documents — just complete the online KYC.
  
  

• You can pledge different securities, including mutual funds, shares, bonds and insurance.
  
  

• You get to keep earning returns or dividends even after pledging your investment.
  This is a big change from how LAS worked earlier with banks. NBFCs are making it possible to borrow money quickly without selling what you own.
  
  

3. Who Can Use This Loan?

A lot of different people can benefit from Loan Against Securities:

• Investors who need funds urgently but don’t want to sell shares or mutual funds
  
  

• Freelancers or small business owners who face short-term money gaps
  
  

• Students or families who need to pay fees or medical bills
  
  

• High net-worth individuals (HNIs) who want to use their portfolio for cash flow
  Even small businesses can use LAS by pledging company shares or personal investments for working capital.
  
  

4. How Does Technology Work?

Behind the scenes, NBFCs use smart tools to make the loan process smooth:

• They connect with platforms like CAMS or KFintech to check your mutual fund details.
  
  

• They use APIs to check the live market values of your shares or funds.
  
  

• They offer e-sign and video KYC so you don’t need to go anywhere.
  
  

• Loans are tracked and managed digitally.
  Everything is online — from applying to getting the money in your bank.
  
  

5. Things to Keep in Mind

Even though LAS is useful, there are a few things to remember:

• You must repay the loan on time to avoid any penalties.
  
  

• If the value of your investment falls a lot, you might have to give extra security (this is called a margin call).
  
  

• Not all mutual funds or shares are accepted — NBFCs have a list of approved securities.
  
  

• The loan amount depends on the value of your investments (usually 50% to 70%).
  

6. Why LAS Has a Bright Future

As more people in India start investing, LAS and LAMF are becoming more popular. With the help of technology and paperless processes, NBFCs are giving people easy access to credit without needing to sell their investments. It’s a smart option for those who want to manage both their borrowing and investing goals side by side.

7. Interest Rates and Charges

When opting for a Loan Against Securities, it’s important to understand the interest rates and associated charges. Generally, LAS interest rates are lower than personal loans because the loan is secured by your investments. However, the rates may vary based on the type of security you pledge (for example, shares may have a higher interest rate than debt mutual funds). NBFCs may also charge processing fees, renewal fees, or foreclosure charges — so always check the fine print before applying.

8. Loan Tenure and Repayment Flexibility

NBFCs offering LAS usually provide flexible repayment options. You can opt for a short-term or long-term loan based on your needs, and some even offer overdraft facilities. This means you pay interest only on the amount you use, not the entire sanctioned limit. Some NBFCs also allow part-prepayment or foreclosure without heavy penalties, giving you more control over how you manage your loan repayment.

Conclusion

Loan Against Securities is no longer just for big investors. Thanks to digital NBFCs, anyone with mutual funds or shares can now get a loan easily, quickly, and without stress. So the next time you need money, remember — you don’t always have to break your investments. You can borrow against them smartly and keep your wealth growing.