Loan Against Stocks (LAS) – Eligibility and Documents Required
Applying for a loan in India has traditionally involved lengthy paperwork, multiple visits to a branch, and days of waiting. However, the rise of digital lending has changed this experience significantly for investors. A Loan Against Stocks (LAS) is a secured credit facility that allows you to borrow money by pledging your equity shareholdings and ETFs as collateral, without having to sell them. At smallcase, this process is fully digital and paperless, making it one of the simpler ways for stock market investors to access liquidity.
In this article, we cover the loan against shares eligibility criteria, documents required, fees and charges, and how to apply for a Loan Against Stocks on smallcase.
What is Loan Against Shares (LAS)?
A Loan Against Stocks is a type of Loan Against Securities (LAS) where you use your stock portfolio and ETF holdings as collateral to borrow funds from a lender. The loan amount is determined as a percentage of the current market value of the pledged shares, based on the Loan-to-Value (LTV) ratio.
Unlike a personal loan, a Loan Against Stocks is a secured facility. Because the lender holds your shares as collateral, the loan against shares interest rates are generally lower than those on unsecured loans. The credit limit is not fixed permanently; lenders monitor the market value of pledged securities daily and adjust the eligible limit based on current valuations.
The loan functions like an overdraft facility. You only pay interest on the amount you actually withdraw, not the total sanctioned limit. This makes it a flexible option for investors who need short-term liquidity without exiting their positions.
How to Apply for a Loan Against Stocks?
- Log in to smallcase Credit: Visit smallcase Credit and click on ‘Against Stocks’ to check your credit limit.
- Check eligible stocks: View the listed equity holdings in your demat account that are available for pledging.
- Select stocks to pledge: Choose the shares you want to use as collateral and confirm your credit limit.
- Link your bank account: Add your bank details for disbursement and set up an e-mandate for monthly interest auto-debit.
- Pledge your stocks: Selected shares are lien-marked in favour of the lender while remaining in your demat account.
- Sign the loan agreement: Review the terms, verify with OTP, and sign the agreement online.
- Receive the loan amount: Funds are typically credited to your bank account within 2 working hours after signing.
Note: Stocks must be held in a demat account to be eligible for pledging. Once pledged, the shares cannot be sold until the loan is closed.
Eligibility for Loan Against Stocks India
To apply for a loan against shares on smallcase, you need to meet the following criteria:
- Residency: You must be an Indian resident.
- Age: You must be between 18 and 70 years of age.
- Employment: There are no restrictions on profession or the nature of business. Both salaried individuals and self-employed persons are eligible.
- Holdings: You must hold stocks or ETFs in your Zerodha demat account. The securities must be from the lender’s approved list. Securities that are under lock-in or already pledged with another lender are not eligible.
- PAN Card: You must have an active PAN card.
- Portfolio: Your portfolio must meet the risk criteria defined by the lender. Securities not on the approved list, or those that do not meet the lender’s risk conditions, will not count towards your credit limit.
Note: smallcase investments (baskets of stocks) cannot currently be pledged for LAS, though this feature is being worked on.
Documents Required for a Loan Against Shares
The application is 100% digital and paperless. You do not need to submit physical documents or visit a branch.
What you need to apply:
- PAN card (primary document)
- The phone number and email address linked to your Zerodha account
No income proof, salary slips, property documents, or bank statements are required. Your existing stock holdings serve as the security. Checking your credit limit on smallcase has no impact on your CIBIL score.
Fees and Charges for Loan Against Shares on smallcase
| Fee / Charge | Details |
| Interest Rate | Starting at 10.25% p.a. on the outstanding withdrawn amount only |
| Part-Prepayment Charges | Nil |
| Foreclosure Charges | Nil — close the loan any time without any charges |
| Loan Tenure | Up to 36 months |
For a complete and current schedule of all applicable charges (including processing fees, demat pledge charges, and penal interest), refer directly to the smallcase LAS page and loan agreement before applying.
Note: Interest is charged only on the amount you have withdrawn, not on the total sanctioned credit limit. The rate of 10.25% p.a. compares favourably to auto loans (12–15%), consumer loans (14–28%), and credit cards (24–36%).
Key Things to Know Before Applying for Loan Against Stocks India
- Your credit limit is tied to the market value of your pledged stocks. The outstanding loan amount cannot exceed a certain percentage of the value of your pledged stocks; this percentage is known as the Loan-to-Value (LTV) ratio. The lender monitors this continuously.
- What happens when the price of your stocks falls? If the value of your pledged stocks falls such that your outstanding loan amount becomes greater than the allowed LTV percentage, you will be required to repay a certain amount to bring your loan-to-value back within permitted limits. If this demand is not met for 7 consecutive days, the lender may recover the outstanding amount by liquidating your pledged stocks after notifying you.
- You retain full ownership benefits. Even while your stocks are pledged, you continue to receive dividends and other benefits associated with your shareholdings, unless otherwise specified in the agreement.
- Repayment is interest-only. Your monthly obligation is to pay only the interest on the amount you have withdrawn. Principal can be repaid in full or in part at any time. Part-prepayment and foreclosure carry no charges.
- Closing the loan is straightforward. You can close your loan any time without any foreclosure or hidden charges. Request closure from the help section of your loan dashboard or by reaching out to the support team. Once there is no outstanding amount, your pledged stocks will be released and your loan account will be closed as soon as possible.
To Wrap It Up
A Loan Against Stocks India on smallcase is a practical way for equity investors to unlock liquidity without selling their holdings. The loan against shares eligibility requirements are minimal: Indian residency, an age between 18 and 70 years, stocks or ETFs in a Zerodha demat account, and an active PAN card. Documentation is limited to your PAN and your Zerodha-linked contact details. The entire process is digital and takes just 4 steps.
With an loan against shares interest rate starting at 10.25% p.a., no foreclosure charges, and no part-prepayment penalties, LAS can be a cost-efficient borrowing option for investors who want to keep their portfolios working for them while meeting short-term financial needs. That said, it is important to borrow within your repayment capacity and account for potential market-driven changes to your credit limit before applying.
Looking for a Loan Against Mutual Funds (LAMF)? Explore LAMF on smallcase –
You can now apply for a loan against mutual funds (LAMF) on smallcase. Explore the quick and paperless process with the following articles about the eligibility criteria, documents required, features, benefits and more on LAMF at smallcase!
Frequently Asked Questions About Loan Against Shares Eligibility and Documents Required
Any Indian resident between 18 and 70 years of age who holds eligible stocks or ETFs in a Zerodha demat account and has an active PAN card can apply. Both salaried and self-employed individuals are eligible, with no restrictions on profession or business type.
You need your PAN card and the phone number and email address linked to your Zerodha account. No income proof or bank statements are required. The process is 100% digital and paperless.
Only stocks and ETFs from the lender’s approved list, held in your Zerodha demat account, are eligible. Securities under lock-in or already pledged with another lender cannot be used.
The lioan against shares interest rate at smallcase starts at 10.25% p.a. Interest is charged only on the amount you withdraw, not on the full sanctioned credit limit.
The loan on stocks tenure is up to 36 months. You can do part-prepayment or foreclosure at any time during this period without any charges.
Yes. If you have an existing LAMF, you can add LAS using your stocks as additional collateral. Similarly, if you have an existing LAS, you can top it up with LAMF using your mutual fund investments. The only restriction is that you cannot take a top-up LAS on an existing LAS.
No. Checking your credit limit on smallcase has no impact on your CIBIL score.
If the value of your pledged stocks falls such that your outstanding loan exceeds the permitted Loan-to-Value (LTV) ratio, you will be required to repay part of the outstanding loan on stocks to bring it back within allowed limits. If this demand is not met for 7 consecutive days, the lender may liquidate a portion of your pledged stocks to recover the amount, after notifying you.
No. You can close your loan against shares and securities at any time without any foreclosure or hidden charges. Part-prepayments are also free of charge.
No. Once stocks are pledged as collateral, they cannot be sold until the loan is fully repaid and the pledge is released. You continue to receive dividends and other ownership benefits on your pledged shares.
