The loan amount you can borrow against shares is generally a percentage of the current market value of the pledged stocks. Lenders in India typically offer loans of up to 50-70% of the share value, depending on factors such as the type of shares, the company’s financial health, and market volatility. As share prices fluctuate, the value of the pledged collateral may change, but you maintain ownership and can still benefit from any dividends declared during the loan tenure.

One of the main advantages of taking a loan against shares is the relatively lower interest rate compared to unsecured loans such as personal loans or credit cards. Lenders view shares as a secured asset, which allows them to offer better terms. Furthermore, the loan processing is usually quick, with minimal paperwork required, making it a convenient option for those in need of immediate cash. The flexibility in repayment schedules and the ability to repay the loan in part or full at any time adds to the attractiveness of this option.

However, it’s important to consider market conditions when opting for a loan against shares. If the value of the pledged shares declines significantly, the lender may ask for additional collateral or partial repayment to cover the shortfall. Hence, it’s crucial to carefully choose which shares to pledge and monitor their performance during the loan period. For individuals who want to maintain their portfolio while addressing financial obligations, a loan against shares offers an effective and manageable way to bridge liquidity gaps without liquidating assets.