Monday 20 March 2017

Now get digital loan against your shares in few minutes

The long wait for loan disbursement is over! HDFC Bank, one of India’s largest private sector lender has launched Digital Loan against Securities (LAS) exclusively for HDFC Bank demat account holders. Paper-based loan processing in rural areas and smaller towns takes more than seven days. With HDFC Bank’s Digital LAS, the time taken would be less than five minutes. Such non-metro focused initiatives of HDFC Bank are bridging the credit gap between rural and urban India.


HDFC Bank is the first bank in the country to completely automate the entire process of creating an overdraft facility in a separate current account for loan against shares. Customers can avail loans against share in just three easy steps.

The steps are:
  • Select shares to be pledged on Netbanking.
  • Accept agreement through one-time password (OTP)
  • Pledge shares with National Securities Depository Limited (NSDL) online through OTP

HDFC Bank has collaborated with NSDL to provide a hassle-free customer experience. The entire process can now be completed in few minutes, instead of days. Currently such facility is only available against selected demat shares but HDFC Bank is keen to extend borrowings against other securities such as mutual fund, bonds and insurance policies in the near future.

Digital LAS facility is also available to customers even with no credit history. HDFC Bank offers an attractive interest rate of 10.5% on Digital LAS facility. The rate of interest on Digital LAS is much lower than personal loan as the customer pledges marketable risks. Banks can provide low interest rates as the risk quotient in marketable investment is low when compared to physical assets. Digital LAS comes with no strings attached. One can use the loan amount wherever he or she wants. Although, borrowers should avoid investing the loan amount back in shares due to regulatory constraints.

Customers can avail a minimum loan of Rs. 1 lakh and a maximum loan of Rs. 20 lakh under this facility. The offering empowers the customer to design their own loan against shares. Banks normally disburse 50% of the value of pledged shares as loan. For example, if you pledge shares worth Rs. 10 lakh then you would be eligible for a loan up to Rs. 5 lakh under Digital LAS facility.

This is path-breaking. Digital LAS is part of HDFC Bank’s strategic focus on customer convenience, access and delight, using technology as an enabler. The offering empowers the customers to design their own loan against shares. A large part of our motivation is inclusion of Tier 2 & Tier 3 customers in this digital revolution. We see customers not only from metros but towns like Katni, Baramulla, Rangpo going online to experience this first hand. I am confident that the latest digital platform will offer a differentiated experience to not just our customers, but even prospective customers. We will use Digital LAS to offer further enhancements in the time to come.
– Mr. Arvind Kapil, Country Head – Unsecured Loans, Home, and Mortgage Loans, HDFC Bank

HDFC Bank holds the largest share of pie at 51% when it comes to loans against shares. The total lending portfolio of private sector banks in loans against shares is pegged at Rs. 5,000 crores. HDFC Bank expects an YoY growth of 40% in loans provided through Digital LAS.

- Chaitanya Kulkarni

Friday 3 March 2017

How blue chip Stocks make one rich?

Stock Rating, Stock Market, India, Finance
Successful investors look for stable stocks in fluctuating markets. Stock market is always a risky investment. But as value investors say, "Investing isn’t risky; not being in control is." Risk comes from not knowing what you’re doing. A successful investor manages risk aptly such that their investments bear handsome returns in the long run while preserving the investment capital. Investing in blue chip stocks helps reduce risk.

Blue chip companies in India are measured as most stable stocks for investment. The Indian stock market has thousands of listed companies but most of them are either average performers or wealth destroyers. A Blue chip stock is a stock of well- established company which has reputation to operate profitably in adverse economic conditions. Blue chip companies are market as well as industry leaders. These stocks command huge investor confidence as they are known for stability and reliable returns. The name blue chip is derived from poker casino tokens where blue chips are of high value.

Blue chip stock companies also declare dividend on regular intervals. Getting dividends during the havoc of bear markets shows that the company one has invested in is positive about its cash flows. A Blue chip company performs well when compared to its competitors during difficult times. Some examples of Indian blue chip stocks are Reliance Industries Ltd., State Bank of India, TCS, ONGC, Infosys, HDFC, Bharti Airtel etc.

Blue chips are generally safe to invest. But that doesn’t mean the investors should buy these stocks blindly. There have been cases like Satyam Computers where the wealth creators turned into wealth destroyers. Proper financial analysis and expert opinion is advised as blue chip stocks are costly due to high valuation. It is of utmost importance to buy right stock at a right intrinsic value.

SAMCO, one of India’s leading online discount broking firm has created a stock rating tool which rates listed securities on NSE platform. A tool that rates stocks and businesses on key business parameters, matrices and grades every stock rating from “AAA” to “Penny Stock”. Naturally, robust businesses with strong fundamentals are rated better and the rating falls as the quality of the business dynamics deteriorates. The ratings add to investor knowledge and alerts investors against making wrong investment decisions. Investors can decide whether to buy or not to buy after assessing the stock rating on SAMCO platform. The rating acts as a guide or a 'second opinion' as one may say!

samco stock rating
Samco Stock Rating

SAMCO’s stock rating platform accesses 20 vital business parameters. Factors like industry and business model, sustainability, cash flow, EBITDA results, managerial decisions, corporate governance etc. are taken into consideration before publishing a stock's rating. SAMCO’s stock rating process and rating scale is similar to many credit rating business models. AAA being the highest and Penny being the lowest. A weighed score is published on the scale of 1 to 10. It should be noted that stock rating process doesn’t evaluate stock price because of price fluctuation.

In case of blue chip companies, stock rating of most companies would fall in the rating scale of AA to AAA with a weighed score above 8 out of 10. Stock rating for blue chip companies would help investors in understanding the fundamental analysis of a company and the industry in which it operates. advises its readers to keep a long-term horizon for blue chip stocks to yield better returns. Keep investing!

Disclaimer – Information provided is purely based on our research. Please consult your financial advisor before making any investment decisions.