State Bank of India, the apex bank of the country offers loans against shares which is a comparatively limited domain. The best part about these loans is that these can be taken in times of urgent personal need when you do not know which financial investment to fall back on. Your equities can get you a loan of up to Rs.20 lacs to enable you to meet all urgent monetary needs.
Loan against shares is granted only for personal needs and is not granted for any of the following –
- Investments of inter-corporate nature
- Speculative purposes
- Controlling interest in one company or more
Eligibility: Loan against shares is sanctioned only for the existing customers of State Bank of India and is based on customer’s prior relationship with the bank as well as on bank’s discretion. Also, for availing this loan customers should have a DEMAT account with SBI Cap Sec.
This loan can only be availed on a single name and is offered as a demand loan.
Features of SBI loan against shares:
- Maximum loan amount is Rs.20 lacs. This amount cannot exceed Rs.10 lacs if the loan is being taken for subscribing to IPOs. Minimum loan amount that can be availed against stocks is Rs.500
- Repayment period is 30 months in which the loan should be paid through a suitable DP program
- This is a demand loan and is sanctioned only when customer has his/her DEMAT account with SBI
- A margin amount equivalent to 50% of the prevailing market prices of your stocks is to be submitted to the bank
- Security is submitted in the form of stocks against which this loan is sanctioned
- SBI does not charge a processing fee for sanctioning this loan
- Currently, the rate of interest charged on these loans is 16.35% p.a.
What is loan against shares?
With rising consumer spends on loans and increasing costs of loans, new ways of acquiring credit are emerging. Loans against shares is one such new way of generating cash. This option is increasingly becoming popular among borrowing customers as well as lending institutions.
Banks usually specify the list of companies against which they are ready to offer loans. The sanctioning of loan and the corresponding loan amount depend upon the credit history of the borrower as well as the valuation of his/her shares. Sanction of this loan is also majorly dependent upon the relationship of customer with the bank. Usually loan amount is 50-70% of the value of shares that are pledged with the bank.
Advantages of loan against shares:
- A unique way to generate cash in times of need. Instant liquidity is an advantageous feature of these loans
- Interest is charged only on the amount that is actually utilized by the borrower and not on the whole loan amount
- Interest is charged only for the span of time in which the loan amount is utilized
- Some banks offer loans against physical stocks as well. Dematerialized shares are preferred by all banks
While loan against shares sounds like an extremely quick and convenient way of obtaining . If you would like to get a Personal Loan from SBI