RBI Guidelines You Must Know Before Availing a Loan Against Securities (LAS) in 2025
Loan Against Securities (LAS) is becoming a popular financing option among investors who want to meet liquidity needs without selling their valuable assets. But before you pledge your stocks, mutual funds, or bonds, it’s crucial to understand the Reserve Bank of India’s (RBI) guidelines that govern LAS in India.
🔍 What Is a Loan Against Securities?
LAS is a credit facility provided by banks and NBFCs where individuals or businesses pledge their securities—like shares, mutual funds, bonds, insurance policies—as collateral to secure a short-term loan. This type of loan helps meet urgent financial needs while retaining investment ownership.
📘 Key RBI Guidelines for LAS in 2025
- Eligible Securities: As per RBI guidelines, banks can offer LAS against listed shares, mutual fund units, demat bonds, insurance policies, and more. Unlisted or speculative securities may not qualify.
- Loan-to-Value (LTV) Ratio: RBI caps LTV for LAS at up to 50% of the market value of shares. Mutual funds and debt securities may allow a slightly higher margin depending on issuer risk profile.
- Maximum Loan Limit: Most scheduled commercial banks are allowed to provide up to ₹20 lakh for individuals and ₹10 crore for corporates under LAS (as per RBI Master Circular 2024).
- Account Type: LAS is typically offered as an overdraft (OD) or demand loan account with flexible repayment. Interest is charged only on the amount utilized.
- Monitoring Requirements: Lenders must monitor the market value of the pledged security daily. If it falls, borrowers may be required to top-up the margin or risk liquidation.
💡 Benefits of LAS Backed by RBI Guidelines
- 🏦 No asset liquidation required — continue earning on your investments
- ⚡ Quick disbursal and minimal documentation
- 📈 Ideal for short-term working capital needs or emergencies
- ✅ RBI-backed limits ensure transparency and borrower safety
📎 Documents Required for LAS Application
- Demat holding statement or mutual fund portfolio
- PAN, Aadhaar & KYC documents
- Bank statements for last 6 months
- Income proof (for higher amounts)
🛡️ Regulatory Safeguards in Place
RBI mandates periodic audits of LAS books, especially for NBFCs. In case of under-collateralization due to market volatility, lenders must issue margin calls to protect both themselves and borrowers from risk exposure.
🔚 Final Thoughts
LAS is a powerful financing solution if you need liquidity without losing investment benefits. However, understanding the RBI guidelines is key to managing this facility wisely. At INVESTOEDGE, we help you navigate the LAS process seamlessly with full compliance and transparency.
Need a LAS? Contact us for a free consultation.