Loan Against Securities: A Practical Approach to Managing Liquidity

At some point, most investors face a situation where they need funds—urgently or temporarily.

It might be for education fees, a home renovation, business working capital, or a medical expense. In such moments, many are forced to sell long-term investments, often at suboptimal valuations or with tax implications.

One less-discussed option is Loan Against Securities (LAS).

This facility allows investors to use their existing mutual fund investments (or shares, bonds, ETFs) as collateral to raise funds—without redeeming them.

What is Loan Against Securities?

Loan Against Securities is a type of secured loan. You pledge your financial investments as collateral and receive a line of credit or term loan in return.

Unlike personal loans or overdrafts, LAS does not require income proof or asset sale. It is simply a way to unlock the value of your investments while retaining ownership.

As of 1st July 2025, Mirae Asset has reduced the interest rate for LAS accounts to 10.25% p.a., which applies to both new and existing loans.

Any new loan initiated now will automatically be updated to this new rate on July 1.

Why Investors Use LAS

Here are some practical benefits of this facility:

• Retain ownership: The investments continue to stay in your name and may keep growing in value.

• Avoid tax implications: You don’t trigger capital gains tax since you're not redeeming your units.

• Faster than real estate liquidity: Selling property may take months. LAS takes hours.

• Flexible usage: There's no restriction on how you use the funds.

• Cost-effective: Interest is lower than many unsecured credit facilities, and you pay interest only on the amount utilized.

When Might LAS Be Useful?

Loan Against Securities is a useful consideration in scenarios like:

• Short-term cash flow mismatches

• Time-sensitive opportunities (e.g., buying an auctioned asset, booking early payment discounts)

• Managing professional or business expenses without disturbing asset allocation

• Handling sudden or planned large-ticket expenses

It may not suit everyone, but for investors with sizable mutual fund holdings, it's a way to create instant liquidity—without giving up long-term compounding benefits.

Process Overview

Mirae Asset offers a streamlined digital process to avail this facility. Here’s a simplified outline (To be followed only via mobile through their app):

1. Visit: Loan Against Securities Portal (https://miraeassetfin.page.link/A162330)

2. Complete Aadhaar-based eKYC via Digilocker

3. Select mutual fund folios/stock to pledge

4. Lien is marked digitally via CAMS/Karvy

5. Funds are credited to your account

No branch visits. No physical forms. However, to be honest, use it only if you need it.

How it Compares with Other Liquidity Options

Final Notes

Loan Against Securities is a quiet but powerful option in a financial toolkit. It doesn't require you to dismantle your investments, and it provides access to liquidity in a structured, cost-efficient manner.

As with any financial decision, it's important to assess your repayment capacity, understand the terms, and evaluate alternatives.

If you're holding substantial mutual fund units and foresee a temporary funding requirement, LAS is one route worth considering.

To learn more or explore the process, you can visit this link (https://miraeassetfin.page.link/A162330).

— Team Fincare