A few banks offer loan against securities, has anyone tried, is the process easy?
Can pledging also help in restraining yourself from selling the shares due to short term market fluctuations and help you hold long term?
I wanted a credit card for my newly formed company and the bank said I can pledge my shares and that it was an easy thing to process (bank was kotak, and I held all securities in Kotak Securities) . I chose to make a small FD instead -
Talk to your bank, shouldn’t be difficult.
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Hi… Can we reinvest the funds received from LAS in equity stocks…
Process is very easy but i will not at all advise it for retail investors.Stay Away from this it has more dangers than you realize.
It is very straightforward and easy.
AFAIK, almost all the banks offer this. I use Axis Bank and they offer it at 9 to 11%. Aim to apply one and bargain for the end of the month of end of the quarter or financial year (as the sales people have quotes, they tend to give LAS loans at a lower rate of interest).
Yes, you can invest the funds in equity.
I typically go up to 20% of my long portfolio and invest.
One thing to note is that the banks have a list of approved securities, and found that none of the stocks from my holdings is approved 
Here’s icici bank’s approved scrips
ICICI bank loan against securities FAQ
Hi…Praveen… Coula you help me in finding any regulatory guidelines in this respect…
hey Harsh,
I don’t understand what you mean by regulatory guidelines but here is the website link for Axis Bank where you can apply.
https://www.axisbank.com/retail/loans/loan-against-shares/features-benefits
Cheers.
Zerodha allows you to do that easily and that can be used as collateral for F&O trading. So one illustration is to pledge, say, Infosys shares and then sell calls using them as collateral. If the calls expire out of money you earn the premium for free and if they expire in the money you still haven’t made a loss (though you haven’t made a profit because of the share appreciation either). So long term holdings can benefit from this approach. I’m not advocating this, just illustration on how you can make money from idle investments. If you do this when call IV is high you can make 10-12% per year approx by this approach
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I don’t think you are right. When you take a Loan Against Shares (from a bank), you specifically sign two undertakings-One is that you will not deploy the money in buying shares, and second, the total LAS is Rs. 20 lakhs across banks.
In my experience, bank salesmen wilfully neglect to tell you these conditions, but when you actually sign papers, you need to give these undertakings. Now banks have no real means of monitoring the end use, nor are the interested in it. But at least for me, I do not sign undertakings which I have no intention of adhering to, even if they do not cause any harm to anybody.
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Thank you for letting me know. I was unaware of this.
Suppose I want to purchase more shares for the long term using the margin I get after pledging some of my shares. Is this possible in Zerodha? Have you done it? How has been your experience?
do we have to pay interest to zerodha for selling calls using shares in demat as collateral?
No , zerodha won’t allow to buy shares against the pledged shares , they will allow only intraday. For positional buying you can go with many other brokers which provide mtf facilities.
Zerodha will charge interest only on debit balance. No interest for intraday selling
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