Rich people took short-term loans against their equity portfolios last year to fund business and personal requirements instead of selling their shares at a loss as the Indian stock markets declined.
Interest in products such as loans against securities (LAS) and loans against mutual funds (LAMF) offered by banks and non-banking finance companies has been on the rise, as reflected in the loan books of lenders. With such products, individuals pledge their shares or mutual funds as collateral to borrow funds.
High net worth individuals and ultra-HNI clients have started using the LAS facility very actively, said Vikas Satija, managing director and CEO of Shriram Wealth. There are two broad use-cases: creating short-term liquidity for business or personal needs without selling investments and using existing investments to raise funds for fresh investment opportunities, Satija said.
Bajaj Finserv’s assets under LAS grew 31% to ₹33,247 crore in FY26, as per its investor presentation. The LAS segment was the fastest-growing segment for Bajaj Finserv last year, excluding gold loans and commercial vehicle and tractor finance loans, which have grown on a small base. To be sure, some of Bajaj Finserv’s LAS include assets of its margin-trading facility.
Tata Capital’s LAS assets increased 29.7% to ₹4,942 crore in FY26, second only to the 36% growth in its loans against property segment, according to its investor presentation.
For DSP Finance, which started operations a year ago dealing only in LAS and LAMF, the total loan book reached ₹4,300 crore in a short span.
There are other companies present in the LAS and LAMF segments, but data was available for only three entities.
Stock returns
The BSE Sensex closed at 75,867.80 on 27 May, off a high of 86,159 on 1 December 2025.
Satija said that if investors believe Indian stocks can continue delivering double-digit returns over the long term and the cost of borrowing is lower than the expected returns, then there is little reason to liquidate assets during a correction.
Experts noted that LAS reached a major turning point over the past 18 months, driven by increased promotional efforts by NBFCs and fintech companies.
They tied up with mutual fund distributors and advisers to position LAS as an alternative source of liquidity instead of redeeming investments, said Mithil Sejpal, co-founder of SLiQ, a Zerodha-backed platform that provides LAS facilities. SLiQ disbursed about ₹225 crore in LAS in FY26 and crossed ₹100 crore in April and May this year.
LAS and LAMF are typically structured as overdraft facilities and borrowers pay interest only for the number of days the money is used. If the pledged mutual fund is equity-heavy, lenders usually offer 50% of its value as a loan. If it is debt-heavy, they offer as much as 80%. Interest rates are usually between 9.5% and 10.5%.
Lenders also maintain margin requirements because the underlying collateral is linked to the market. If the value of the pledged securities falls sharply, borrowers receive a margin call asking them to either repay part of the loan or pledge additional securities. Most lenders provide a few working days to resolve this before taking further action.
If borrowers fail to meet this requirement within the deadline, the lender has the legal right to forcibly liquidate the investments at a low market point. This will lock in the portfolio losses permanently and lowering the borrower's credit score, said Abhishek Kumar, a registered investment advisor and founder of Sahaj Money.
“To avoid these risks, we advise one to limit their borrowing to a conservative portion of your total eligible limit, such as 30% to 40%, rather than maxing out the allowed credit line. Also, pledges should be in liquid large-cap assets rather than small caps,” he said.