Loan Against Shares (LAS) is a type of secured loan where investors can pledge their owned shares or securities as collateral to obtain funds from banks or financial institutions. This facility allows shareholders to unlock the value of their investments without selling them, thereby maintaining ownership while meeting short-term financial needs. The loan amount typically depends on the market value of the pledged shares and the lenderís margin requirements.

Under a Loan Against Shares arrangement, borrowers pledge listed equity shares, mutual fund units, or exchange-traded funds (ETFs) to the lender. The lender provides a loan amount that usually ranges between 50% to 75% of the market value of the securities, depending on volatility and regulatory norms. The pledged shares are held in a lien until the loan is repaid. If the value of the securities falls significantly, the borrower may be required to provide additional margin or collateral.

The interest rate on LAS varies across financial institutions and is influenced by factors such as the borrowerís profile, the value of pledged securities, and prevailing market conditions. Borrowers can use the funds for various legitimate purposes, including business expansion, personal expenses, or debt consolidationósubject to SEBI and RBI regulations, which prohibit using such loans for speculative trading or investing in the stock market.

From an investment perspective, a Loan Against Shares can be an effective liquidity solution, enabling investors to meet financial needs without liquidating their portfolio. However, borrowers should carefully assess repayment capacity and market risks, as any sharp decline in share prices could lead to a margin call or liquidation of pledged securities. When managed prudently, LAS serves as a flexible and efficient financing option while preserving long-term investment potential.