Check loan interest rates against life insurance, KVP, NSC and mutual funds

In some cases, taking out a loan against a surety is better than selling your investments. Although your security is with the lender, it can continue to grow.

Take the example of stocks. If these stocks are part of your long-term holding, you can continue to receive dividends while they are pledged to the lender.

According to the HDFC Bank website, you can get a loan on multiple securities. But the amount that the lender will give you against the collateral varies.

For stocks and mutual funds, HDFC Bank offers 50% of the current value of the loan. A borrower can get 80% of the net asset value (NAV) of a debt fund and life insurance policies. Against the National Savings Certificate, Kisan Vikas Patra, and non-convertible debentures, borrowers can get up to 70% of the current value.

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Most lenders usually lend against two or more shares

If you do not withdraw all the money offered as a loan, the bank will charge interest on the amount used by the borrowers.

Most lenders usually lend against two or more shares. But some may also grant a loan for only one share. But they must be on the bank’s approved list. The Kotak Mahindra Bank, for example, has a list of 749 stocks that it lends to.

Check it out here.

Interest rates on securities loans range from 7.8% to 18%, according to data from Some lenders have a minimum loan amount that you can take out. HDFC Bank requires borrowers to ask for at least 1 lakh, which means that the borrower will have to commit at least 2 lakh of stocks or stock mutual funds, according to its website. The State Bank of India offers a minimum loan of 50,000.

Processing fees for secured loans are generally lower than for other loans. Canara Bank, for example, charges 0.1%. Tata Capital charges up to 1% of the loan amount.

(Do you have any questions about personal finance? Send them to and have them answered by industry experts)

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