Step-by-Step: How to Apply for a Loan Against Securities on smallcase
Applying for a Loan Against Securities on smallcase is fully digital. There is no paperwork, no branch visit, and no CIBIL check. Once your application is submitted and the agreement is signed, the loan is disbursed to your bank account within 2 working hours.
This guide walks through every step of the application from checking eligibility to drawing from your credit line after disbursement.
Understanding the Two Credit Options on smallcase
On the smallcase app or website, go to the Credit section after logging in. You will see two options:
| Product | What You Pledge | Best For |
|---|---|---|
| Loan Against Mutual Funds (LAMF) | Mutual fund units (equity, debt, hybrid) registered with CAMS or KFintech, or demat units in a Zerodha account | Investors with MF portfolios who want to avoid redeeming units |
| Loan Against Stocks | Listed equity shares and ETFs held in a Zerodha demat account | Investors with equity share portfolios in demat form |
Select the product that matches what you want to pledge. Both follow similar steps but differ in how holdings are imported and how collateral is verified.
How to Apply: Loan Against Mutual Funds (LAMF)?
The following steps cover the LAMF application – pledging mutual fund units registered with CAMS or KFintech, or demat units held in a Zerodha account. Before starting the application, confirm that you meet the following requirements:
| Criteria | Requirement |
|---|---|
| Residency | Resident Indian |
| Age | 18 to 70 years |
| Employment type | Salaried or self-employed – no profession restrictions |
| Account type | Individual account only – joint folios are not eligible |
| PAN | An active PAN card is linked to your bank account |
| Mutual funds | Non-demat units registered with CAMS or KFintech, or demat units in a Zerodha account |
| Minimum loan amount | ₹25,000 |
| CIBIL check | No hard check – checking your credit limit does not affect your credit score |
Step 1 – Open the smallcase App and navigate to the Credit Section
Open the smallcase app on your mobile device or visit the smallcase website. Log in with your registered credentials.
Once logged in, go to the Credit section on the app. Here you will see two options:
- Loan Against Mutual Funds – to borrow against your mutual fund holdings
- Loan Against Stocks – to borrow against your listed equity shares held in a demat account
Select the option that matches what you want to pledge. This guide covers Loan Against Mutual Funds. Tap on it and then tap Apply Now to begin the application.
Step 2 – Enter Your PAN and Date of Birth
You will be asked to enter your PAN card number and date of birth. These details are used to verify your identity and fetch your mutual fund holdings linked to your PAN.
An OTP will be sent to your registered mobile number. Enter it to proceed. This step does not affect your CIBIL score – it is not a hard credit inquiry.
Step 3 – Import Your Mutual Fund Holdings
smallcase fetches your mutual fund portfolio digitally from CAMS and KFintech – the two main Registrar and Transfer Agents (RTAs) – using credentials linked to your folios.
- For CAMS-serviced funds: enter the email address registered with your CAMS folio.
- For KFintech-serviced funds: enter the phone number registered with your KFintech folio.
If you hold funds registered with both RTAs, enter credentials for both to ensure all eligible holdings are captured. Missing a registered credential means those folios will not appear, and the credit limit calculation will be incomplete.
Step 4 – Check Your Credit Limit and Select Funds to Pledge
Once your holdings are imported, the platform displays your eligible mutual fund schemes and calculates your available credit limit based on the applicable Loan-to-Value (LTV) ratio:
| Fund Type | LTV on smallcase | Example |
|---|---|---|
| Equity mutual funds | 45% of the current market value | ₹2,00,000 in equity MFs → credit limit of ₹90,000 |
| Debt mutual funds | 75% of current market value (max LTV: 85%) | ₹2,00,000 in debt MFs → credit limit of ₹1,50,000 |
Select the fund schemes and number of units you want to pledge as collateral. You can pledge part of your holdings – you do not need to pledge your entire portfolio. Only the units you select will be lien-marked.
Once units are pledged, they cannot be redeemed, switched, or transferred until the loan is fully repaid and the lien is released.
Step 5 – Enter the Loan Amount
Enter the amount you want to draw from your credit limit. This is the amount that will be disbursed to your bank account. The minimum draw is ₹25,000, and the maximum is your eligible credit limit, up to ₹5,00,00,000.
You do not need to draw the full credit limit. Drawing less than the maximum creates a buffer – if the NAV of your pledged funds falls, a smaller draw reduces the risk of triggering a margin call.
Step 6 – Link Your Bank Account and Set Up an eMandate
Link the bank account to which you want the loan disbursed. This account will also be used for the monthly interest auto-debit.
You will be asked to set up an eMandate (Electronic Mandate) – an automated instruction that allows Bajaj Finance to debit the monthly interest amount from your linked bank account on the due date. Ensure this account has sufficient funds on the interest due date each month to avoid bounce charges.
Step 7 – Complete Video KYC
As required under RBI guidelines, you will need to complete a Video KYC (VKYC) verification. This is a short digital video call conducted through the app – no physical visit is required. You will need to show your original PAN card during the call. The VKYC typically takes a few minutes and can be completed on the same day.
Step 8 – Review and Sign the Digital Loan Agreement
Before the loan is disbursed, you will be presented with the loan agreement. This document covers:
- The sanctioned credit limit
- The interest rate on LAMF (9.99% p.a. on outstanding drawn amount)
- The loan tenure (36 months)
- The full schedule of fees and charges
- Terms for margin call resolution, LTV breach, and default
- The lender’s rights over pledged securities
Read the agreement carefully before signing. Sign digitally using an OTP sent to your registered mobile number.
Step 9 – Disbursement
Once the agreement is signed and the lien is marked on your pledged units, the loan amount is credited to your linked bank account within 2 working hours.
You will receive a confirmation from smallcase and a lien confirmation from CAMS or KFintech (or from your depository for demat units), confirming that the units are under lien.
How to Apply: Loan Against Stocks on smallcase?
If you want to pledge listed equity shares or ETFs held in your Zerodha demat account, select Loan Against Stocks from the Credit section. The process is 4 steps and is fully digital.
Step 1 – Go to Loan Against Stocks in the Credit Section
Open the smallcase app or visit the smallcase website. Log in and go to the Credit section. Select Loan Against Stocks and tap Apply Now.
Step 2 – Import Your Stock and ETF Holdings
Your listed equity shares and ETFs held in your Zerodha demat account are fetched automatically. The platform displays eligible securities and calculates your credit limit based on the current market value of the holdings and the applicable LTV ratio.
You can pledge shares from your own holdings or from eligible family members – parents, spouse, or children. The shares must be in a Zerodha demat account to qualify.
Step 3 – Add a Bank Account and Set Up the eMandate
Link the bank account for loan disbursement and set up an eMandate for monthly interest auto-debit. Ensure the account is in your name and has sufficient funds on the monthly interest due date.
Step 4 – Pledge Your Stocks and Sign the Loan Agreement
Select the shares and ETFs you want to pledge. The pledge is created through the depository (NSDL or CDSL) on the shares you hold in your Zerodha demat account. Review the loan agreement carefully – it covers the sanctioned credit limit, interest rate, fees, margin call terms, and the lender’s rights over pledged securities. Sign digitally using an OTP.
Once the agreement is signed and the pledge is confirmed, the loan amount is disbursed to your bank account.
LAMF Fees and Charges on smallcase
The following charges apply to Loan Against Mutual Funds on smallcase (lender: Bajaj Finance Limited). All figures are as of early 2026 and subject to change.
| Charge | Amount | When It Applies |
|---|---|---|
| Interest rate | 9.99% p.a. on outstanding drawn amount | Monthly, on every day the drawn amount is outstanding |
| Processing fee | ₹999 or 1% of loan amount (higher of the two), max ₹4,999 + GST | One-time, deducted at loan sanction |
| Minimum loan amount | ₹25,000 | At application |
| Late payment interest | 1.5% per month on overdue interest | If monthly interest is not paid by due date |
| Bounce charge | ₹1,200 per instance | If auto-debit for interest fails |
| Demat pledge charge | ₹50 + GST (lender) + ₹32 + GST (Zerodha) per security | Only for demat-held units; nil for CAMS/KFin folio units |
| Foreclosure charge | Nil | No charge for early full repayment |
| Part-prepayment charge | Nil | No charge for partial principal repayment |
| Lien removal (post-repayment) | Nil | After full loan closure |
After Disbursement: How to Manage Your Loan on smallcase?
Drawing from the Credit Line
LAMF on smallcase is structured as an overdraft (OD) credit line. You can draw additional amounts from your available credit limit at any time – the minimum withdrawal per transaction is ₹1,000. Go to the Credit section on the app, select Loan Against Mutual Funds, and tap Withdraw to initiate a draw.
Repaying the Loan
Monthly interest is auto-debited from your linked bank account on the due date. You can repay the principal at any time – in full or in part – with no prepayment charges. Go to the Credit section, select Loan Against Mutual Funds, and tap Repay Cash to make a repayment.
Once the principal is repaid, the repaid amount is immediately restored to your available credit limit and can be drawn again without a new application.
Closing the Loan
To close the loan, repay all outstanding principal and accrued interest in full. Then raise a closure request from the Loan Dashboard or contact smallcase support. Once all dues are cleared, Bajaj Finance submits a lien release request to the RTA or depository. The lien is removed, and your pledged units are fully accessible again – you can redeem, switch, or transfer them as normal.
Monitoring for Margin Calls
Your credit limit changes daily as the NAV of your pledged funds moves. If the drawn amount exceeds the revised eligible limit after a NAV fall, a margin call is issued. You have 7 days to either repay the shortfall or pledge additional approved units. Check your Loan Dashboard regularly – particularly during volatile market periods – to stay ahead of any shortfall before a formal margin call is issued.
To Warp It Up…
A loan against securities allows borrowers to access funds without selling their investments. Products such as Loan Against Mutual Funds (LAMF) and Loan Against Stocks work by pledging eligible securities as collateral while the investments continue to remain in the borrower’s ownership.
Even though the process may appear seamless and digital, borrowers should understand important concepts related to loans against securities before pledging their investments. Factors such as LTV ratio, margin calls, approved securities, interest costs, repayment structure, and collateral risk can directly affect the borrowing experience.
Frequently Asked Questions
The entire process, from starting the application to receiving the disbursement, takes under 2 working hours once the agreement is signed. The application itself typically takes 10–15 minutes.
Loan Against Stocks interest rate starts at 10.25% p.a., calculated only on the outstanding drawn amount, not the full sanctioned credit limit. This makes LAS significantly more cost-effective than personal loans (typically 11–24% p.a.) or credit card revolving debt (24–36% p.a.).
The most common reasons: your funds are ELSS units still within the 3-year lock-in; your specific schemes are not on Bajaj Finance’s approved list; your demat units are with a broker other than Zerodha; or the email/phone you entered doesn’t match what is linked to your folio. Verify and re-enter all credentials linked to your CAMS and KFintech folios
Yes, you can choose which schemes and how many units to pledge. You do not need to pledge your entire portfolio. Only the units you select are lien-marked – the rest of your holdings are unaffected.
A failed auto-debit attracts a bounce charge of ₹1,200 per instance. Overdue interest also attracts a penal rate of 1.5% per month until cleared. Ensure your linked bank account is funded on the interest due date each month. You can use the interest rate calculator to get an idea about the total amount you need to pay for a loan against mutual funds.
Yes, the LAMF on smallcase is an overdraft credit line. You can draw, repay, and draw again without reapplying. Each draw must be at least ₹1,000 and must be within your available credit limit.
The default tenure is 36 months. You can repay and close the loan at any time before this without foreclosure charges. If the full outstanding amount is not repaid by the end of the tenure, pledged units may be liquidated to recover the balance.
You can apply for a loan against stocks through lenders, banks, or digital platforms such as smallcase. The process generally involves checking eligible securities, pledging approved stocks, completing verification, and receiving a credit line based on the value of the pledged holdings.
You can pledge listed equity shares and ETFs held in a Zerodha demat account. Shares from your own holdings or from eligible family members (parents, spouse, children) in a Zerodha demat account are accepted. The security must be on the lender’s approved scrips list. Unlisted shares, penny stocks, and shares already pledged elsewhere are not eligible.
LAMF uses mutual fund units as collateral. A loan on stocks uses listed equity shares and ETFs held in a Zerodha demat account. Both are overdraft credit lines with similar repayment flexibility. Individual stocks tend to be more volatile than diversified MF portfolios, so Loan Against Stocks in India carries a higher risk of margin calls. The LTV for equity shares is capped at 50% under RBI guidelines, similar to equity MFs on smallcase (45%). Select the product based on which asset you hold and want to retain.
The loan against shares interest rate on smallcase starts at 10.25% p.a. The applicable interest rate may vary based on lender terms, pledged securities, and other eligibility criteria.
Disclaimer: Interest rates are subject to change at the lending partner’s discretion and may vary based on portfolio composition, platform terms, and applicable regulations. Please check the current rate on the platform before applying.
You can get a loan against shares online on smallcase in 4 easy steps – a completely digital and paperless process.
– Import your stocks and ETFs investments
– Add a bank account for receiving funds and set up a mandate for monthly interest auto-debit
– Pledge your stocks with the lender
– Sign the loan agreement online
