Introduction
When funds are required, investors often compare a Loan Against Shares with selling their shares. Both provide liquidity but have different implications for ownership, repayment and market participation.
Loan Against Shares
Approved listed shares are pledged as collateral while ownership generally remains with the borrower.
Selling Shares
Selling transfers ownership and may have tax implications depending on applicable laws.
Comparison
A loan requires repayment and interest but allows continued ownership; selling provides immediate proceeds without repayment but ends ownership.
Benefits of LAS
Retain ownership, potential lower borrowing costs than unsecured loans and quick access to funds.
Risks
Margin calls, interest obligations and possible sale of pledged shares upon default.
SEBI-related Considerations
Understand pledge building, LTV, lender terms and repayment obligations before proceeding.
Disclaimer
This article is for informational purposes only and should not be construed as financial, investment, legal or tax advice. Loan eligibility, LTV, interest rates and terms vary by lender.