Loan against Shares Meaning

Loans against shares or securities are a great way of raising capital when one is in need of funds. These types of loans are given by banks in the form of overdraft against the shares held by the customer. The biggest benefit of this is that it enables the customers to get instant liquidity without selling their securities and when one repays the debt he or she gets back the shares from the bank thus there is no liquidation of stocks.

The valuation of this type of loan is quite tricky because of the constant change in the price of securities as the price of shares keep changing on day to day basis and therefore depending on the bank policies the percentage of loan given (ranges between 50 to 70 percent of total value) is less as compared to loan against property.

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