Mumbai: HDFC Bank Ltd on Wednesday started offering loan against securities (LAS) digitally, reducing the time to disburse a loan to a few minutes from several days earlier.
The bank has tied up with National Securities Depository Ltd (NSDL) for this.
“Through this product, we are looking at making this a fully digital process. Customers do not need to provide wet signatures while pledging shares. By tying up with NSDL, we have been able to remove that step altogether,” said Arvind Kapil, country head, unsecured loans, home and mortgage loans, HDFC Bank.
Customers can pledge shares directly through their demat accounts and give necessary approvals while applying for the loan. The bank approves it instantly and the money is credited to their bank accounts, under this system. Once shares are pledged, a customer cannot sell them unless the loan against them has been cleared.
The average interest rate on these loans will be 10.5% and the minimum loan amount will be Rs1 lakh. According to Kapil, the industry practice is to give out 50% of the value of pledged shares as loan.
“Private sector banks together account for about Rs5,000-6,000 crore worth loans against securities. We control about 51% of those loans. Public sector banks do not provide these numbers, so it is difficult to guess the size of their portfolio,” Kapil said.
HDFC Bank has been growing its loan against securities portfolio by about 40% year-on-year, he added.