Top 4 reasons behind the rising demand for Loan Against Shares in India
Loan against shares simply means a loan based on the value of your shares, bonds, or securities. While recent developments indicate that loans against shares in India have gained much prominence, many people are still completely ignorant of their potential. There are various banking and non-banking establishments that provide such loans. For instance, Bajaj Finserv is a leading NBFC (non-banking financial company) that provides easy Loans against shares, insurance policies, mutual funds, and bonds. If you are planning to avail one for yourself, the first thing you need to do is know what it means and when to apply for loan against securities. Let us start by examining the reasons behind the latest trends involving loans against bonds, securities, and insurance.
- Blooming Stock Market
Since recovering from the slowdown in 2009, the stock market in India has entered a golden era that holds the prospect for a long-term bull run, according to recent statistics. Many major factors like industrial growth, fiscal prudence, and improved business conditions have already fallen into place in the economy. Eventually, this trend paved the way for the popularization of loans against security. Banks and financial institutions are more than ready to give away loans against bonds, securities, and mutual funds, while keeping a close watch on the current market situation.
- Personal Loans Versus Loans Against Security
Figures in the latest monthly bulletin issued by the RBI indicate that more people are willing to opt for a loan against shares than a personal loan. While the adoption of the former grew by a whopping 24.9% in the recent past, personal loans showed a sluggish growth of 9.2%. There are two reasons for this change: one is that the eligibility ratio for the loan against securities and bonds is higher, and the other is that interest rates for personal loans have become somewhat higher than usual. If you are planning to take a loan against shares, go with Bajaj Finserv who offer Loans up to INR 15 crores, with benefits like instant online approval and nil foreclosure charges.
- Easy Availability
Most banks and lenders are willing to lend loans on your shares, and the loan against shares process is as simple as getting a loan against precious metals like gold. You can get a higher loan amount for shares with greater dividends. Financial institutions like Bajaj Finserv offer you the flexibility to swap securities according to your convenience, and also provide options like Prepayment of Loans at any interval.
- Higher Loan to Value Ratio
Once the application for a loan against shares is passed, the bank issues you a current account for the loan. One of the greatest benefits of this loan is that you can get a higher loan to value ratio for your securities, making it a great mortgage option. The bank also charges interest only on the amount that you have withdrawn from the account and for the time you have utilised the funds.