Definition
Loan Against Securities (LAS)
A loan against securities lets you borrow by pledging shares, mutual funds or bonds as collateral, accessing liquidity without selling your investments.
A loan against securities (LAS) is an overdraft or loan secured by lien-marking your investments — listed shares, mutual fund units, bonds or ETFs. You borrow up to a percentage (loan-to-value) of their value while continuing to own them and enjoy any appreciation or dividends.
It provides liquidity without triggering a sale and the associated capital-gains tax, useful for short-term needs. Interest is charged only on the amount used. However, if the collateral's value falls, the lender may demand a margin top-up or sell the pledged securities.
LAS suits investors who need cash temporarily and want to stay invested, but it carries market-linked risk and should not be used to over-leverage against volatile holdings.
Related terms
- Demat AccountA demat account holds your shares and securities in electronic form, eliminating physical certificates and enabling seamless trading and settlement on stock exchanges.
- Floating vs Fixed Rate LoanA fixed-rate loan keeps the interest rate constant for the tenure or a period, while a floating-rate loan moves with a benchmark, changing EMIs or tenure as rates shift.
- Lien MarkingLien marking is the temporary blocking of funds or securities in an account as security, preventing their use until the lien is released, common in loans against deposits or shares.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.