Bajaj Finance Limited offers various financial solutions to individuals. One quick and efficient way is to raise funds by taking loans against securities, such as shares and mutual funds. This facility allows borrowers to meet their financial needs without selling their investments.
Let us learn how a loan against shares works, highlight its benefits and see detailed steps for applying for a loan against securities with Bajaj Finserv Ltd. We will also cover the eligibility criteria and loan limits and understand the concept of Employee Stock Ownership Plans (ESOPs) as a way to further enhance financial well-being and motivation among employees.
What Do You Mean By A Loan Against Shares?
A loan against shares (LAS), also known as a loan against securities, is a type of loan where an individual pledges their shares or securities as collateral and borrows funds from a financial institution. Usually, the amount that can be borrowed is a percentage of the market value of the pledged shares. Bajaj Finance Limited offers a loan against shares of up to 50% of the portfolio value. Let us see in simple steps how it works:
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Step I: Pledging shares
The borrower selects the shares or securities from their portfolio that they wish to pledge as collateral. These usually include shares, mutual funds, or other marketable securities.
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Step II: Valuation
The lender evaluates the current market value of the pledged shares. The loan amount is based on a predetermined margin. Bajaj Finance Ltd. provides a loan amount of up to 50% of the market value of the pledged shares.
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Step III: Documentation
While applying for a loan against shares with Bajaj Finance Ltd, the borrower needs to provide the following documents prior to entering a loan agreement.
Documents:
– KYC documents:
a. Passport
b. Driving License
c. Voter’s Identity Card
d. Aadhaar
e. Job Card issued by NREGA
f. Letter issued by the National Population Register
– PAN card
– DEMAT holding statement
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Step III: Loan agreement
The borrower and lender enter into a loan agreement, which details the terms of the loan, such as interest rate, loan tenure, and repayment schedule.
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Step IV: Disbursement
Once the loan documentation is completed and shares are pledged, the loan amount is disbursed to the borrower. This amount can be used as per the borrower’s requirements.
Why take a loan against securities from Bajaj Finance Ltd?
Bajaj Finance Ltd. is one of the preferred option among investors for taking loans against securities. It provides a flexible and efficient way to meet your financial needs. Let us study some key features and benefits of taking loans against shares with Bajaj Finance Limited:
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Competitive Interest Rates
Bajaj Finance Ltd. provides loans against securities at competitive interest rates. The interest is only charged on the amount that you draw down and not the entire loan limit. This makes it a cost-effective borrowing option compared to unsecured loans.
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Flexible Repayment Options
The repayment terms for a loan against shares from Bajaj Finance Ltd. are highly flexible. Borrowers can choose the repayment schedule that best suits their financial situation, which helps them manage their cash flow better.
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Quick and Hassle-Free Disbursal
The application process for a loan against securities with Bajaj Finance Ltd. is designed to be seamless. If the given collateral is readily quantifiable, the loan is often processed and disbursed relatively quickly as compared to other loan types.
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High Loan Amounts Against Pledged Securities
Bajaj Finance Ltd. offers high loan amounts against pledged securities. Individuals can get up to Rs. 5 crores online, while financial institutions can get up to Rs. 1,000 crores offline. This way, borrowers can enjoy significant liquidity without liquidating their investment portfolio.
What Is the Eligibility Criteria?
To be eligible for a loan against shares from Bajaj Finance Ltd, you must meet the following criteria:
- You must be an Indian citizen.
- The age range for eligibility is between 18 and 90 years.
- Both salaried individuals and self-employed professionals are eligible.
- The minimum value of the securities to be pledged should be Rs. 50,000.
How Much Loan Against Shares Can You Get?
The amount you can borrow through a loan against shares from Bajaj Finance Limited varies subject to maximum 50% of value of shares. Read the table below to know the limits set for individual borrowers:
| Minimum loan amount | Maximum loan amount |
| Rs 10,000 | Rs. 5 crores |
It is essential to note that for corporates, HUF, LLP, and partnerships, the maximum loan amount can be up to Rs. 1,000 crores.
Financing Alternatives with Bajaj Finance Limited
Bajaj Finance Ltd. also offers loans against other types of securities, including mutual funds, insurance policies. Each of these options allows individuals to leverage their financial assets to secure funding without liquidating their investments. For instance, a loan against mutual funds involves pledging mutual fund units as collateral, while a loan against insurance involves using the surrender value of an insurance policy. Another significant offering is ESOP financing, which provides employees with the opportunity to obtain significant funding to buy shares and keep them until a time when they can be sold.
Now, let us delve into understanding ESOPs and how they can play a crucial role in enhancing financial security.
What Is ESOP?
An Employee Stock Ownership Plan (ESOP) is a program that provides a company’s employees with an ownership interest in the company. This is usually done by allocating the company’s shares, either as a direct benefit or through profit-sharing plans.
In most cases, the employees gain ownership of the shares over time through a vesting schedule. This schedule specifies the period that an employee must work before earning the right to the shares.
Conclusion
Bajaj Finance Ltd. offers a practical solution to borrowers looking to raise funds using their securities, such as shares, mutual funds, or other marketable securities. By taking a loan against securities from the Bajaj Finance, you enjoy competitive interest rates, flexible repayment options, and high loan amounts with a quick and hassle-free application process.
This way, borrowers can access substantial funds without liquidating their portfolios. Additionally, programs like ESOPs further enhance financial stability and employee motivation by providing shares of the employer company.