One can avail the loan against shares from bank or other lending institution. Banks or other lending institutions have a list of approved list of the securities and a borrower may apply for the loan against the shares of those companies from the list. A borrower must possess the shares in physical or demat form. The list of approved securities may change from lender to lender. It may happen that the securities or shares of a particular company may be accepted by a lender and the same may be rejected by another bank. Generally these shares are of blue chip companies and people carefully plan the investment in these shares. It is one of the commonly used patterns to raise funds by keeping the investment in shares safe and offering it as security to the lending institute. The loan can equally be availed by offering the Mutual fund units, bonds and other securities as specified by the lending institutions. The bank or the lending institution follow a process to determine the value of the shares possessed by the borrower and then an exact amount of loan to be disbursed is fixed. Even the NRIs can avail loan against shares.
