Borrow against your shares and funds, without selling them.
A loan against securities gives you instant liquidity while your investments stay fully invested and keep working for you. This calculator sets the right loan-to-value for your security type, applies the RBI loan limit, and shows the one thing most other tools miss entirely: the exact market drop that would trigger a margin call and force a top-up.
Eligibility and margin risk on a securities-backed loan
How a Loan Against Securities Works
In short: A loan against securities lets you pledge your shares, mutual funds, or bonds as collateral and borrow against them, without selling. The loan-to-value depends on the security: RBI caps shares at 50 percent, equity mutual funds at 75 percent, while debt funds and bonds can go higher.
A per-borrower loan limit of Rs 1 crore, revised upward by RBI in October 2025, applies to shares and debt mutual funds. Because the value of securities moves daily, a fall can trigger a margin call, the risk that sets this loan apart from one against a fixed deposit, whose value never moves.
The appeal is that your investments keep working while you access liquidity. You do not have to sell, so you stay invested for any future upside, and you avoid triggering the capital gains tax event that a sale would otherwise create.
The loan is usually quick to arrange, as an overdraft or a term loan, and the rate is lower than an unsecured personal loan because it is secured. For an investor who needs cash for a few months but believes in their holdings for the long run, this combination of low cost, speed, and staying invested is hard to beat.
The catch is that securities are not stable collateral the way an FD is. Their market value changes every day, and the lender monitors it daily.
If the value falls far enough that your outstanding loan breaches the permitted loan-to-value, you face a margin call: you must top up the collateral or repay part of the loan quickly. This is the single most important thing to understand before pledging, and it is what separates a loan against securities from the far simpler loan against a fixed deposit, whose value never moves.
The calculator above handles all of it. It sets the correct loan-to-value for your security type, applies the Rs 1 crore limit where it bites, computes your loan and its interest, and, uniquely, shows the market drop that would trigger a margin call and the top-up a sharp fall would require.
Most calculators for this product stop at the loan amount, treating a loan against securities as if it were as simple as a loan against an FD. That misses the entire point. The loan amount is the easy part; the risk is what a borrower actually needs to understand, and it is why this calculator puts the margin-call scenario right alongside the loan figure rather than burying it.
Why borrowing less is safer
The relationship between how much you borrow and your margin-call risk is direct. If you borrow the full amount your loan-to-value allows, you are already at the limit, so any fall in value triggers a shortfall immediately.
If you borrow only half of what you could, your portfolio can fall a long way before the loan breaches the limit, giving you a large safety buffer. This is why prudent borrowers against securities take well below the maximum, leaving room for the market to move against them without forcing a scramble to top up.
A simple way to size this is to decide how large a fall you want to survive without a call, and work back from there. If you want to withstand a 30 percent drop on an equity portfolio, you would borrow well under the 50 percent limit, so that even after a 30 percent fall the loan still sits within the reduced eligible amount. The calculator makes this concrete by showing your trigger drop for any loan amount, so you can dial the borrowing down until the buffer feels safe.
Under the hoodHow This Securities Loan Calculator Works
The tool applies the loan-to-value rules and then models the margin-call risk that most calculators ignore. Understanding each step lets you judge the safety of your borrowing.
Step one: eligibility and cost
When you choose your security type, the calculator sets the loan-to-value that RBI and lenders apply to it, 50 percent for shares, higher for funds and bonds. It multiplies your portfolio value by this ratio to find the maximum loan.
For shares and debt mutual funds, it then applies the Rs 1 crore per-borrower loan limit, capping the amount where your portfolio would otherwise allow more. It then computes the interest on the amount you actually take, at the rate you enter, for the months you need, since the facility is usually an overdraft that charges interest only on what you use.
Step two: the margin-call simulator
This is the part that matters most and that other tools leave out. The calculator works out the portfolio value at which your outstanding loan would exactly equal the permitted loan-to-value, the point at which a margin call is triggered.
It expresses this as a percentage drop from your current value, so you see at a glance how much the market can fall before you are called, and whether that margin feels comfortable given how volatile your holdings are. It also shows the top-up you would need if the portfolio fell by 20 percent, a realistic stress scenario, so you can judge whether you could meet it comfortably.
Securities are living collateral. Unlike an FD, whose value is fixed, a pledged portfolio is revalued every day. A market fall can turn a comfortable loan into a margin shortfall overnight. The buffer you leave by borrowing below the maximum is your protection against that.
Loan-to-Value by Security Type for FY 2025-26
The loan-to-value ratios below reflect current RBI norms and typical lender policy. They are subject to change, so confirm the current position with the Reserve Bank of India and your lender before pledging.
| Security type | Typical loan-to-value | Loan limit |
|---|---|---|
| Listed shares (equity) | Up to 50 percent | Rs 1 crore per borrower |
| Equity mutual funds | Up to 75 percent | Per lender policy |
| Debt mutual funds | 75 to 90 percent | Rs 1 crore per borrower |
| Bonds and government securities | Up to 90 percent | Per lender policy |
Key terms of a loan against securities
| Feature | Typical position |
|---|---|
| Facility type | Overdraft or term loan, up to 36 months |
| Interest | About 9 to 12 percent, on the amount used |
| Monitoring | Portfolio revalued daily |
| Eligible securities | Listed shares, funds, bonds, in demat form |
| Not eligible | Unlisted or penny stocks, speculative use |
A loan against securities sits alongside the other ways of raising funds against an asset you own. To compare with borrowing against a bank deposit, use the loan against FD calculator, and against property, the loan against property calculator.
Getting itHow the Facility Is Arranged
Setting up a loan against securities is quicker than most people expect, because the collateral is financial and easily verified. Many lenders now offer the whole process online, and knowing the steps helps you act fast when a need arises.
The first requirement is that your securities are in dematerialised form, held in a demat account. If they are, pledging is largely digital: you select the shares or fund units to pledge, the lender or depository marks them as pledged, and the loan or overdraft limit becomes available. Physical certificates would first need to be converted to demat form.
For loans against mutual funds in particular, platforms have made this almost instant. You can often pledge units and see your eligible limit within minutes, with the loan disbursed the same day. The lender places a lien on the units, which stay invested and keep their value while pledged, and the lien is lifted once you repay.
Because the securities are the collateral and are easy to value and sell, the lender does the minimal borrower assessment that an unsecured loan would require. This is why a loan against securities is one of the fastest ways to raise a meaningful sum, provided you hold an eligible, demat portfolio that appears on the lender’s approved list.
This speed is one of the genuine attractions of the product. In an emergency, the alternative of selling securities takes a settlement cycle and crystallises tax, while an unsecured loan takes days of assessment. A loan against securities can put funds in your account almost immediately, which is exactly what you want when the need is urgent and you would rather not disturb your investments.
Watching the marketManaging the Loan Once It Is Live
Unlike a loan against a fixed deposit, a loan against securities needs ongoing attention, because the collateral moves with the market. Managing it well is mostly about staying ahead of the margin-call risk rather than reacting to it.
The key habit is to monitor your pledged portfolio against the trigger level. The lender revalues daily and will alert you if a shortfall arises, but a careful borrower watches the value themselves and acts before a formal call. If the market drifts down toward the trigger, repaying a small part of the loan early restores the buffer quietly.
It also helps to think in terms of headroom rather than the maximum loan. The amount of cushion you have is the gap between your current portfolio value and the value at which a call would trigger. Keeping that gap comfortable, by borrowing conservatively at the outset, means normal market volatility never forces your hand.
When the market rises, the opposite happens and your position improves automatically. A higher portfolio value lifts your eligible limit and widens your buffer, and if you had drawn near the limit, a rally moves you safely away from it. No action is needed in that case; the risk is entirely on the downside, which is why the discipline is about protecting against falls.
Finally, plan the exit. Because the loan carries market risk for as long as it is outstanding, repaying it promptly when your need passes removes that risk entirely and releases your securities. A loan against securities is best used as a short bridge rather than a long-term borrowing, precisely so that your exposure to a market fall while pledged is kept brief.
Thinking of it this way also guards against a subtle temptation. Because the facility is cheap and easy, it can be tempting to leave a loan outstanding longer than needed, treating the portfolio as a permanent source of cash.
But every extra month the loan is live is another month of market risk on the collateral, and the longer the horizon, the more likely a significant fall becomes. Discipline about repaying when the need has passed is what keeps a smart, cheap facility from quietly becoming a standing risk to your investments.
Worked examplesThree Portfolios and Their Loans
Numbers make the loan-to-value and margin risk concrete. Each scenario below shows a different security type and a different safety buffer. Read the one closest to yours, then run your own figures above.
Ankit pledges shares worth Rs 50 lakh. At the 50 percent loan-to-value for equity, his maximum loan is Rs 25 lakh, but he sensibly borrows only Rs 15 lakh for his need.
Because he borrowed well below the maximum, his portfolio can fall a good deal before the loan breaches the limit. This buffer means a normal market wobble will not trigger a margin call, and he sleeps easily. Had he taken the full Rs 25 lakh, any drop at all would have put him in shortfall, so his restraint bought him real safety.
The specific numbers make it vivid. His Rs 15 lakh loan against a portfolio that supports Rs 25 lakh means his shares could fall by around 40 percent before the loan breached the 50 percent limit.
A fall of that size would be a serious market event, not a routine dip, so Ankit is well insulated. Had he borrowed the full Rs 25 lakh, even a 1 percent fall would have put him in shortfall, needing an immediate top-up. The gap between those two outcomes is the value of the buffer.
Divya pledges debt mutual funds worth Rs 2 crore. The 85 percent loan-to-value for debt funds would allow Rs 1.7 crore, but the RBI per-borrower loan limit of Rs 1 crore for shares and debt mutual funds caps her loan at Rs 1 crore.
The upside of this cap is a large safety buffer. Because her Rs 1 crore loan is well below the 85 percent her portfolio could support, the fund value would have to fall sharply before a margin call arises. The regulatory cap, while limiting how much she can borrow, leaves her position comfortably cushioned against market moves.
In her case, the Rs 1 crore loan against a Rs 2 crore portfolio means the fund value could fall by roughly 40 percent before a margin call. Debt funds are far less volatile than equity, so a fall of that magnitude is very unlikely, making her position exceptionally safe. Divya effectively gets the cap as an unintended safety feature: the regulation that limits her borrowing also protects her from ever facing a realistic margin call on stable debt collateral.
Rahul pledged Rs 20 lakh of shares and borrowed the full Rs 10 lakh at 50 percent. Then the market fell 20 percent, cutting his portfolio to Rs 16 lakh. At 50 percent, that value now supports only an Rs 8 lakh loan, but he owes Rs 10 lakh.
He faces a margin call for the Rs 2 lakh shortfall: he must either pledge more securities or repay Rs 2 lakh quickly. Because he had borrowed to the limit, he had no buffer, and a routine market correction forced him to find cash at short notice. His experience is exactly why leaving a margin matters.
The sting is the timing. A margin call arrives precisely when the market has fallen, which is the worst moment to have to find cash or pledge more, since your other holdings are likely down too.
Rahul had to either scrape together Rs 2 lakh at short notice or sell shares into a falling market to repay, crystallising a loss. A borrower who had left a buffer would have watched the same 20 percent fall with equanimity, because their loan would still have been comfortably within the limit.
Why Pledging Beats Selling
One of the strongest arguments for a loan against securities, beyond keeping your investments, is what it does for your tax position. Selling to raise cash and borrowing against the same holdings lead to very different outcomes, and the difference can be substantial.
When you sell shares or mutual fund units, you realise a capital gain if they have appreciated, and that gain is taxable in the year of sale. For a long-held, well-appreciated holding, the tax on selling can be significant, and it is a cost you incur simply to access cash you may only need temporarily.
Pledging the same securities for a loan raises the cash without a sale, so no capital gain is realised and no tax is triggered. Your holdings stay in your name, continuing to earn dividends or accrue value, and the only cost is the loan interest. For a temporary need, this can be far cheaper than selling, paying tax, and later buying back at a possibly higher price.
The buy-back cost is easy to overlook. If you sell to raise cash and later want the same exposure, you must repurchase, possibly at a higher price if the market has risen, and you have already surrendered the tax.
Borrowing sidesteps both: the holding never leaves your portfolio, so there is nothing to buy back and no gain to tax. Over a full cycle of need and recovery, this can make pledging substantially cheaper than the sell-and-rebuy alternative.
The comparison sharpens for anyone sitting on large unrealised gains. Selling forces you to crystallise those gains and hand over the tax now, whereas a loan defers that entirely.
You keep the compounding intact and the tax bill for another day, or avoid it altogether if you never sell. This deferral is a genuine financial advantage, and it is why sophisticated investors often borrow against a portfolio rather than trim it.
The counterweight, of course, is the margin-call risk that selling avoids. If you sell, you have the cash outright with no ongoing obligation.
If you borrow, you carry the loan and the exposure to a market fall forcing a top-up. The right choice weighs the clear tax and continuity benefits of pledging against the certainty and the freedom from risk that selling provides, and it differs by how large your gains are, how long you need the money, and how much market risk you can stomach.
A useful way to frame it is by the length of the need. For a short bridge of a few months, pledging usually wins clearly: you avoid the tax, keep the investment, and carry the market risk only briefly.
For a long or open-ended need, the calculation shifts, because carrying market risk on pledged collateral for years is a real exposure, and at some point selling and being free of the loan may be the calmer choice. Matching the tenure of the loan to the true length of your need is the practical discipline that keeps the pledging strategy sensible.
Expert tipsSix Tips for Borrowing Against Securities
Keep the loan well below the limit
Borrowing the full loan-to-value leaves no room for the market to fall. Taking well below the maximum gives a buffer that protects you from a margin call on a normal correction.
Know your security’s loan-to-value
Shares allow only 50 percent, funds and bonds more. Pledging more stable, higher-LTV securities like debt funds or bonds gives you more loan and less volatility to worry about.
Monitor your portfolio during the loan
The lender revalues daily, so watch your pledged holdings. If the value drifts down toward the trigger, act early by repaying a little rather than waiting for a formal margin call.
Use it for short-term needs
A loan against securities suits a temporary requirement where you expect to repay soon. The longer you hold it, the longer you carry market risk on the pledged collateral.
Value the tax deferral
Pledging avoids the capital gains tax that selling would trigger. For a holding with large unrealised gains, borrowing can be far cheaper than selling and rebuying later.
Choose an overdraft for flexibility
As an overdraft, you pay interest only on what you draw, not the full limit. For an uneven need, this keeps the cost low and the standing facility cheap when unused.
Loan Against Securities at a Glance
| Question | Answer |
|---|---|
| Shares LTV | Up to 50 percent |
| Equity fund LTV | Up to 75 percent |
| Debt fund LTV | 75 to 90 percent |
| Bonds LTV | Up to 90 percent |
| RBI loan limit | Rs 1 crore, shares and debt funds |
| Interest rate | About 9 to 12 percent |
| Facility | Overdraft or term loan, up to 36 months |
| Main risk | Margin call if the market falls |
| Tax on pledging | None, no sale is made |
Frequently Asked Questions
What is a loan against securities?
A loan against securities is a secured loan where you pledge your shares, mutual funds, bonds, or other eligible securities as collateral and borrow against them, without selling. The loan amount is a percentage of the securities’ market value, called the loan-to-value, which RBI caps at 50 percent for shares and allows higher for funds and bonds. Your investments stay in your name and keep earning, and you avoid a capital gains tax event that selling would trigger. It is usually offered as an overdraft or a term loan and can be arranged quickly.
How much can I borrow against my shares?
For listed shares, RBI caps the loan-to-value at 50 percent, so you can borrow up to half the market value of your equity portfolio. A Rs 50 lakh share portfolio thus supports a loan of up to Rs 25 lakh. A per-borrower loan limit of Rs 1 crore also applies to loans against shares and debt mutual funds. The exact amount your lender offers can be lower, as some keep a bigger margin to reduce the frequency of margin calls. Borrowing below the maximum is prudent, because it leaves a buffer against market falls.
What loan-to-value applies to mutual funds?
It depends on the fund type. Equity mutual funds are capped at 75 percent loan-to-value by RBI, higher than the 50 percent for direct shares because a diversified fund is less volatile than a single stock. Debt mutual funds have no fixed RBI cap, and lenders typically allow 75 to 90 percent, reflecting their lower risk. So pledging mutual funds usually lets you borrow more against a given value than pledging shares. The Rs 1 crore per-borrower loan limit applies to debt mutual funds along with shares.
What is a margin call on a loan against securities?
A margin call is the lender’s demand that you restore the required margin when your pledged securities fall in value. Because the lender revalues your portfolio daily, if its value drops so that your outstanding loan exceeds the permitted loan-to-value, a shortfall arises. The lender then asks you to either pledge additional securities to increase the collateral or repay part of the loan to bring it back within the limit. If you do not act, the lender may sell some of the pledged securities to recover the shortfall, so responding promptly is important.
What market drop would trigger a margin call for me?
It depends on how much you borrowed relative to the limit. If you borrowed the full loan-to-value, you are already at the limit, so any fall in value triggers a shortfall at once. If you borrowed only half of what you could, your portfolio can fall by roughly half before the loan breaches the limit, a large buffer. The calculator computes your exact trigger point, the percentage drop at which a call would arise, and the top-up a 20 percent fall would require, so you can judge your safety before pledging.
What is the Rs 1 crore loan limit?
RBI sets a per-borrower loan limit for loans against shares and debt mutual funds, which was revised in October 2025 to Rs 1 crore, up from the earlier Rs 20 lakh. This means that even if your portfolio’s loan-to-value would allow more, the loan against these securities is capped at Rs 1 crore for a single borrower. For a very large portfolio, this cap can limit the loan well below the loan-to-value amount. The limit does not apply in the same way to all security types, so confirm the current position with your lender.
Do my securities keep earning during the loan?
Yes. Because you pledge the securities rather than sell them, they remain in your name throughout the loan. Your shares continue to accrue any price appreciation and receive dividends, and your mutual fund units keep their net asset value and any growth. This is a key advantage over selling: you retain the full economic benefit of the holdings while accessing cash against them. The only cost is the loan interest, and the pledged securities are simply held as collateral, returned to your free use once the loan is repaid.
Is a loan against securities cheaper than a personal loan?
Usually, yes. Because a loan against securities is secured by your portfolio, the interest rate, typically around 9 to 12 percent, is lower than the 12 percent or more charged on an unsecured personal loan. As an overdraft, it also charges interest only on the amount you actually use, which can lower the cost further for a flexible need. The trade-off is the margin-call risk, which a personal loan does not carry. For anyone holding an eligible portfolio, the securities loan is generally the cheaper option for a planned need.
Which securities can I pledge?
Lenders accept a defined list of liquid, marketable securities in demat form, typically listed shares from an approved list, approved equity and debt mutual fund schemes, listed bonds and debentures, exchange-traded funds, and government securities. Some also accept insurance policies. Unlisted shares, penny stocks, and speculative instruments are generally not eligible, because they are hard to value and sell. Each lender maintains its own approved list, so the specific shares or funds you hold must appear on it. Your securities must also be in dematerialised form to be pledged.
Can the funds be used for anything?
Largely, yes, but with one important restriction. A loan against securities can generally be used for personal or business needs such as a medical emergency, business expansion, or education. However, RBI discourages using the funds for speculative purposes such as further margin trading or buying more securities to leverage up, and lenders require you to declare the end use. So while the loan is flexible, it is not meant to fund speculation in the market. Using it for genuine liquidity needs rather than to increase market exposure keeps you within the rules.
How is the loan repaid?
Repayment depends on the facility. An overdraft is flexible: you repay whenever you have funds, and interest is charged only on the outstanding balance for the days it is used. A term loan is repaid over its tenure, up to 36 months, as agreed. In both cases you can usually prepay without heavy penalty. Once the loan is fully repaid, the lender releases the pledge on your securities, returning them to your free use. If a margin call is unmet, the lender may sell pledged securities to recover the dues, which is the outcome to avoid.
Is this calculator accurate for my exact case?
The calculator applies the typical loan-to-value by security type, the Rs 1 crore RBI limit, and a clear margin-call simulation to give a close estimate of your loan and its risk. It simplifies some areas, such as lender-specific loan-to-value that may be lower than the regulatory cap, the exact daily revaluation mechanics, and the precise margin thresholds each lender uses. Use it to understand your likely loan and the market drop that would put you at risk, then confirm the exact terms and approved securities list with your lender before pledging.
How quickly can I get a loan against securities?
Very quickly, often the same day and sometimes within minutes, especially for loans against mutual funds. Because your securities are the collateral and are held in demat form, the lender does minimal borrower assessment compared with an unsecured loan. Many platforms let you pledge units online, see your eligible limit instantly, and have the loan or overdraft available the same day. The main requirement is that your securities are in dematerialised form and appear on the lender’s approved list. This speed makes a loan against securities one of the fastest ways to raise a meaningful sum.
What happens if I do not meet a margin call?
If you do not top up the collateral or repay the shortfall within the time the lender allows, the lender is entitled to sell some or all of your pledged securities to recover the amount and bring the loan back within the permitted loan-to-value. This is the outcome to avoid, because it forces a sale at what may be a low point in the market, crystallising a loss and possibly a tax event. Responding promptly to a margin call, or better, acting before one arises by keeping a buffer, protects you from having your securities sold at an unfavourable time.
Does a rising market improve my position?
Yes. When your pledged securities rise in value, your eligible loan limit rises with them, and the buffer between your outstanding loan and the trigger point widens automatically. If you had borrowed close to the limit, a rally moves you safely away from a margin call with no action needed on your part. The margin-call risk is entirely on the downside, so a rising market only helps. This is why the discipline of managing a loan against securities is about protecting against falls, while gains take care of themselves.
Can I still receive dividends on pledged shares?
Yes. Pledging your shares or mutual fund units places a lien on them as collateral, but you remain the owner, so you continue to receive dividends on shares and retain any distributions and growth on funds. The securities stay in your name and your demat account throughout the loan; they are simply marked as pledged and cannot be sold by you until the loan is repaid and the lien is lifted. This retention of the full economic benefit is a core advantage of borrowing against securities rather than selling them.
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Disclaimer and editorial transparency. This loan against securities calculator is an educational tool built to help investors estimate the loan they can raise against shares, mutual funds, or bonds, and the margin-call risk involved, for FY 2025-26. The figures it produces are approximate and simplify several areas, including lender-specific loan-to-value that may be lower than the regulatory cap, the exact daily revaluation and margin thresholds, and the precise application of the Rs 1 crore RBI limit across security types.
It does not constitute financial or investment advice. Your actual terms depend on your lender, the approved securities list, and market conditions, and lending is subject to the framework of the Reserve Bank of India and SEBI.
Verify all figures and terms with your lender before pledging any securities. CalcWise.Finance accepts no liability whatsoever for any decisions taken on the basis of this tool. Loan-to-value norms and limits reflect the position to the best of our knowledge as of FY 2025-26 and are subject to regulatory change, so always confirm the current rules and your specific approved securities list before pledging.