What is LAS (Loan Against Stocks) & How to Apply?

Stocks are growth assets, but they also sit on your balance sheet as untapped liquidity. When you need cash for a financial emergency, a down payment, or to consolidate higher-cost debt, selling shares often looks like the only option. It rarely is. A Loan Against Stocks (LAS) lets you borrow against your existing stock and ETF holdings without selling them, so your investments stay in the market while you access the funds you need.

This guide explains what LAS means, how it works on smallcase, who can apply, the fees and charges involved, what happens during a market dip, and how LAS compares with other borrowing options.

What is a Loan Against Shares (LAS)?

A Loan Against Stocks is a secured lending product that lets you pledge your listed stocks and ETFs as collateral to borrow money from a lender. It belongs to the broader Loan Against Securities family, alongside Loan Against Mutual Funds (LAMF).

Instead of selling your holdings, you place them under a lien with the lender. The lender then sanctions a credit limit based on the market value of the pledged securities and the applicable loan-to-value (LTV) ratio. You retain ownership of the shares, continue to receive dividends and corporate action benefits, and only pay interest on the amount you actually withdraw.

On smallcase, Loan Against Stocks is offered by Bajaj Finance Limited (BFL). The application is fully digital for individual holdings and can be completed in a few minutes inside the app.

How to Apply for Loan Against Shares?

1. Check your credit limit: Visit smallcase Credit and click on ‘Against Stocks’ to check your credit limit. This does not affect your CIBIL score.
2. Import your stocks and ETFs: Fetch the eligible stock and ETF holdings in your Zerodha demat account.
3. Link your bank account: Add your bank details for disbursal and set up an auto-debit mandate for monthly interest.
4. Sign the loan agreement: Review the terms, verify with OTP, and sign the agreement online. A hard credit check happens at this stage.
5. Receive the loan amount: Funds are typically credited to your bank account by the next working day after signing.

Note: Stocks must be held in a Zerodha demat account to be eligible for pledging. Pledged shares cannot be sold while they are under lien. As you repay the loan, you can unpledge shares to the extent of the amount repaid.

How Does a Loan Against Shares Work?

LAS is structured as an overdraft-style credit line. Once your stocks are pledged, the lender sets a sanctioned credit limit, and you can draw funds up to that limit whenever you need them.

The lender, with your consent, places a lien on the pledged stocks in your demat account. Your shares remain in your demat account throughout, so you continue to receive dividends, bonus shares, and other corporate action benefits, unless the loan agreement states otherwise. As you repay, you can release part of your pledged shares to the extent of the amount repaid.

You only pay interest on the amount you have actually withdrawn, not on the full credit limit. Interest accrues daily and is auto-debited on the 7th of every month (or within the next 3 working days). When you repay, your interest outgo reduces immediately. Since there are no foreclosure or part-prepayment charges, you can repay early or close the loan at any time.

Which Stocks and ETFs Are Eligible for LAS on smallcase?

smallcase currently supports stocks and ETFs held in a Zerodha demat account, drawn from the lender’s approved list of securities. Eligibility depends on a few factors:

• Approved list: The security must appear on the lender’s approved list of stocks and ETFs. You can view the full approved list of securities.
• Demat location: Holdings must sit in your Zerodha demat account.
• No prior pledge or lock-in: Securities already pledged with another lender, or shares under a lock-in (such as ESOPs or IPO anchor allocations), are not eligible.

What is Lien Marking on Stocks?

Lien marking is the legal mechanism that allows a lender to hold a claim on your pledged stocks. When you take a Loan Against Stocks, the lender requests the depository (NSDL or CDSL) to mark a lien on the specific quantity of shares you have pledged. This gives the lender the right to recover dues from those shares if you default on the loan.

The lien does not transfer ownership. Your name remains on the shares, you continue to earn dividends, and you can still buy more securities in the same demat account. What you cannot do is sell shares while they are under lien.

As you repay, you can unpledge shares to the extent of the amount repaid. Once you repay the loan in full and close it, the lien is removed from all your pledged shares and they become freely tradable again.

What Are the Fees and Charges of Loan Against Shares?

The total cost of a Loan Against Stocks comprises the interest on the amount you withdraw and a small set of one-time and event-based fees. Interest is charged only on the outstanding (utilised) amount, not the full credit limit. Here is the breakdown of fees for LAS on smallcase.

Fees and charges as of 8th October 2026. They are subject to change, so check the smallcase help center for the latest fees, charges and interest rate before you apply.

For context, unsecured borrowing options typically cost more: auto loans usually sit between 12% and 15%, personal and consumer loans range from 14% to 28%, and credit cards charge anywhere from 24% to 36% per annum. Because LAS is secured by your holdings, it is generally priced lower than these options.

Who Can Apply for a Loan Against Stocks?

LAS via smallcase is built for individual investors who hold stocks and ETFs in a Zerodha demat account. To apply, you need to be:

• An Indian resident who meets the lender’s age criteria. NRIs are not eligible for the fully digital loan against stocks.
• The holder of the Zerodha demat account being used. Joint holdings are eligible, but a co-borrower form must be signed physically and sent to the lender.
• The owner of stocks and ETFs that appear on the lender’s approved list.

There is no separate income proof requirement. The loan is secured against your portfolio, so eligibility depends on the value and composition of your holdings rather than your salary or business income.

Loan Against Stocks Eligibility

To qualify for LAS on smallcase, your portfolio needs to meet a few baseline conditions:

• The pledged securities must be on the lender’s approved list.
• Your eligible holdings should support a credit limit of at least ₹25,000.
• Shares must be free of any existing lien, pledge, or lock-in restriction.
• An active PAN linked to your Zerodha account and a bank account in your name are required for disbursal and auto-debit setup.

You can borrow from ₹25,000 up to ₹5 crore, depending on the value of your eligible holdings.

Documents Required for a Loan Against Stocks

The application is fully paperless for individual holdings. The only inputs required are:

• PAN: Linked to your smallcase and Zerodha accounts.
• Mobile number or email: Registered with your Zerodha account, used to fetch your holdings with your consent.
• Bank account details: For loan disbursal and the auto-debit mandate.

Address proof, income proof, and separate ownership documents for your shares are not required. Joint holdings are the one exception: they need a co-borrower form signed physically and sent to the lender.

Key Features of Loan Against Stocks on smallcase

• Loan amount: ₹25,000 to ₹5 crore, depending on portfolio value.
• Interest only on what you use: Charged only on the utilised amount, accrued daily and auto-debited monthly.
• Credit line behaviour: Withdraw, repay, and re-withdraw within your sanctioned limit without reapplying.
• Quick disbursal: Funds credited to your bank account by the next working day after signing the agreement.
• Digital and paperless: No branch visits or income proof for individual holdings.
• No CIBIL impact to check your limit: Checking your credit limit does not affect your credit score. A hard credit check happens only when you apply for the loan and sign the agreement.
• No prepayment or foreclosure charges: Repay any portion or close the loan at any time without penalty.
• Partial unpledging: Release pledged shares to the extent of the amount you have repaid.
• Continued dividends and corporate actions: You stay invested and keep receiving the economic benefits of holding your stocks.

Benefits of a Loan Against Stocks

• Quick access to liquidity. Funds typically reach your bank account by the next working day after you sign the agreement, with no long underwriting cycle or branch approvals.
• Lower cost than most unsecured loans. Because the loan is secured by your holdings, the lender’s risk is lower, which generally means a lower rate than personal loans (14% to 28%) and credit cards (24% to 36%).
• Your investments keep working. Selling stocks can trigger capital gains tax and exits you from future upside. LAS lets you raise cash while your shares stay invested and keep earning dividends.
• Interest only on what you use. Unlike a term loan, LAS charges interest only on the portion you have withdrawn. Unused credit costs nothing.
• Flexible repayment. Pay the monthly interest, repay any amount of principal when you have surplus cash, or close the loan early, with no foreclosure or part-prepayment charges.
• No impact on credit score to check your limit. Checking your credit limit on smallcase does not trigger a hard pull on your CIBIL report. A hard check happens when you apply for the loan.
• Top-up facility: If you have an existing loan with Bajaj Finance, you may be able to increase your limit by pledging more stocks or mutual funds, while the loan account stays the same. The application processes for LAS and LAMF remain separate. Top-up availability depends on your lender, so check with your lender before you apply for a top-up.

What Can You Use a Loan Against Stocks For?

LAS works well for short to medium-term liquidity needs where selling investments would be expensive, slow, or counterproductive.

Financial Emergencies

Medical expenses, urgent travel, or temporary income disruptions can hit without warning. Drawing from your LAS credit line lets you handle these without selling your portfolio at an unfavourable point in the market cycle.

Down Payment for Larger Loans

Home, car, and education loans typically cover only part of the total cost. LAS can help fund the down payment without forcing you to sell long-term holdings.

Alternative to Unsecured Loans

If you would otherwise take a personal loan or use a credit card, LAS usually works out cheaper, and the savings can be significant on larger amounts. Read our blog on Loan Against Securities or Personal Loan: which is better? for a detailed comparison.

Debt Consolidation

Carrying multiple high-interest debts, such as credit card balances and personal loan EMIs, drains monthly cash flow. Using LAS to pay these off can cut your overall interest cost and simplify repayment.

Business and Working Capital Needs

Self-employed borrowers and small business owners can use LAS to manage short-term working capital, inventory purchases, or vendor payments without selling their investments.

LAS vs LAMF: How Are They Different?

Both Loan Against Stocks (LAS) and Loan Against Mutual Funds (LAMF) sit under the Loan Against Securities umbrella. The core difference is the type of collateral, which shapes the lenders, the eligible universe, and a few other product details.

Note: If you have an existing loan with Bajaj Finance, you can top it up by pledging stocks from your Zerodha demat account or mutual funds as additional collateral. The loan account stays the same, though the application processes for LAMF and LAS are separate. Top-up availability depends on your lender, so check with your lender before you apply for a top-up.

To Wrap It Up

A Loan Against Stocks gives you a structured way to convert long-term investments into short-term liquidity without selling them. You retain ownership, keep earning dividends, pay interest only on the amount you use, and can repay or close the loan anytime without charges.

If you hold stocks or ETFs in your Zerodha demat account and need access to cash without breaking your portfolio, you can explore your eligibility on the smallcase Loan Against Stocks page. Checking your credit limit takes a few minutes and has no impact on your CIBIL score.

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