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What Are the RBI Guidelines for Loan Against Securities

The RBI guidelines for loans against securities mandate a maximum loan amount, margin requirements, and approved securities for lending. Lenders must adhere to these regulations for transparency and borrower protection. At Divadhvik, we help you understand these guidelines for informed decisions.<br><br><br><br><br><br><br>

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What Are the RBI Guidelines for Loan Against Securities

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  1. What Are the RBI GUIDELINES FOR Loan Against Securities? Divadhvik_official www.divadhvik.com

  2. Learn the key guidelines set by the Reserve Bank of India (RBI) for taking a loan against your securities. Divadhvik_official www.divadhvik.com

  3. OVERVIEW OF LOAN AGAINST SECURITIES A loan against securities allows you to pledge your financial instruments (shares, bonds, mutual funds) as collateral. Purpose: For individuals seeking liquidity without selling their investments. Divadhvik_official www.divadhvik.com

  4. LOAN LIMITS & MARGINS The RBI has set limits on the amount that can be borrowed. For equity shares, the margin (loan-to-value ratio) is 50%. For non-convertible debentures (NCDs) and mutual fund units, it varies between 40%-50% depending on the security’s nature. Security Type Loan-to-Value (LTV) Ratio Equity Shares 50% Non-Convertible Debentures 40% Mutual Fund Units 50% Divadhvik_official www.divadhvik.com

  5. ELIGIBLE SECURITIES RBI mandates that only specific securities are eligible for loans, such as: Listed shares Mutual fund units Government bonds Non-convertible debentures Securities must meet creditworthiness criteria set by banks. Divadhvik_official www.divadhvik.com

  6. INTEREST RATES & TENURE Interest rates on loans against securities vary from bank to bank but are often lower than unsecured loans. RBI allows banks to decide the tenure of such loans, which typically ranges from 1 to 3 years, with an option for renewal. Divadhvik_official www.divadhvik.com

  7. KEY POINTS ON REPAYMENT & RISK Borrowers must repay as per the bank’s terms; otherwise, the bank may liquidate the securities. Risk: In case of market downturns, the value of your collateral may drop, prompting the bank to ask for additional securities or partial repayment. Divadhvik_official www.divadhvik.com

  8. Follow for more Follow for more ! Disclaimer ! ! Disclaimer ! Investment in securities market are subject to market risk please read all related documents carefully before investing. Divadhvik Corporate Services Pvt Ltd are not liable or responsible for any of your (Investor’s) profit or loss in market related securities investments. Divadhvik_official www.divadhvik.com

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