Mirae Asset Financial Services has expanded its digital Loan Against Securities (LAS) platform to include CDSL demat accounts. While this offers a way to unlock cash without selling long-term holdings, investors must carefully weigh the interest costs against the risks of forced liquidation if share prices drop.
Mirae Asset Financial Services has streamlined its Loan Against Securities (LAS) offering by enabling digital pledging for shares held in CDSL demat accounts, broadening the reach of its existing NSDL-focused platform. This move allows investors to access funds by pledging their equity holdings as collateral, avoiding the need to sell their investments.
How Digital Pledging Works
Loan Against Securities essentially allows an investor to use their share portfolio as a guarantee to take a loan. The lender provides a loan amount based on a specific percentage of the collateral's value, known as the Loan-to-Value (LTV) ratio. For instance, if a lender offers a 40% LTV, an investor with shares worth ₹10 lakh can borrow up to ₹4 lakh. Mirae Asset’s current facility allows loans ranging from ₹25,000 to ₹1 crore, with interest rates recently observed at approximately 10.25% per annum.
While the shares remain in the investor's portfolio and they continue to receive benefits like dividends, the pledged shares cannot be sold or transferred until the loan is fully repaid. This structure is intended for those seeking short-term liquidity while maintaining their long-term market exposure.
Understanding the Risks and Margin Requirements
For investors, the primary appeal of LAS is the ability to generate cash without triggering capital gains tax, which would apply if they sold the shares. However, this convenience carries specific risks that often go overlooked. The most significant risk is market volatility. If the value of the pledged shares falls significantly, the LTV ratio rises, potentially breaching the lender's limit.
When this happens, the lender will issue a margin call, demanding that the borrower either repay a portion of the loan or provide additional collateral. If the investor cannot meet these demands, the lender has the legal right to execute a forced liquidation, selling the pledged shares in the open market to recover the loan amount. This can result in the investor losing their holdings exactly when they might be hoping for a price recovery.
Regulatory Context and Market Environment
The market for margin trading and loans against securities has seen substantial growth, with India's Margin Trading Facility (MTF) book reportedly reaching ₹1.4 lakh crore by June 2026. Given the scale of this growth, regulators have been active in ensuring stability. The Reserve Bank of India (RBI) implemented tighter regulations on LAS and margin trading in February 2026, with the compliance norms becoming effective on July 1, 2026. These rules have impacted how banks and financial institutions fund their LAS books and manage collateral requirements.
Investors are advised to look beyond the interest rate when evaluating such services. Key monitorables include the lender's collateral valuation methods, the flexibility to adjust the loan limit, and the specific terms for early repayment. Unlike selling shares, which creates a clean exit, taking a loan creates an ongoing liability that requires active monitoring, especially during periods of market stress.