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

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