Reputed financial institutions and banks in India have upped the ante
on extending loans against securities in India.
As expenses go up every single day and consumers look to
create new channels of funding for personal or professional needs, there is a
rising trend to seek hitherto unconventional borrowing methods.
This has led to consumers exploring funding through asset
backed means. Asset backed loans comprise such instruments as owned gold, shares,
equity mutual funds, exchange traded funds (ETFs), bonds, Government
securities, etc. Taking loans
against securities is fast becoming popular among businesspersons and
even private individuals in India. These means are explored when conventional
loan methods may not be available or may not be effective. Normally, loans
against securities are borrowed for a shorter period of time.
The big guns in the
loans against securities universe
Responding to consumers’ growing need to borrow loans
against securities, reputed banks and financial institutions in the country
have created a range of excellent loan products. While consumers use these
loans for their needs, several banks and NBFCs have emerged as key players in
this space.
The big players in the loans against securities arena are:
- IDBI Trusteeship
- Aditya Birla Finance Limited
- Axis Bank
- Axis Finance
- IL&FS Trust
- Bajaj Finance
- Citicorp Finance India
- Kotak Mahindra Investments
- Tata Capital Financial Services
- L&T Fincorp
How loan against
securities work
You may pledge your securities – shares, gold, bonds, Government securities,
et al – the lending institution for a certain tenure. The securities are then
valued and the loan amount is issued to about 50% to 70% of the securities’
value. The borrowers’ credit history also plays a factor in the approval of the
loan.
In India, the top performers in loans against securities are
measured against their cumulative lending per financial quarter.
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