Wealthy Indian investors are increasingly turning to loans against securities (LAS) and loans against mutual funds (LAMF) to maintain their equity portfolios during market volatility. According to reports from Shriram Wealth, high net worth individuals and ultra-HNI clients have started using the LAS facility very actively, with two primary use-cases: creating short-term liquidity for business or personal needs without selling investments and using existing investments to raise funds for fresh investment opportunities. This strategic approach allows investors to avoid selling shares at a loss during market declines.
The interest in LAS and LAMF products has been on the rise, as reflected in the loan books of lenders. Bajaj Finserv's assets under LAS grew 31% to ₹33,247 crore in FY26, making it the fastest-growing segment for the company excluding gold loans and commercial vehicle finance loans. Similarly, Tata Capital's LAS assets increased 29.7% to ₹4,942 crore in FY26, second only to the 36% growth in its loans against property segment. For newer players like DSP Finance, which started operations a year ago dealing only in LAS and LAMF, the total loan book reached ₹4,300 crore in a short span.
The surge in LAS usage comes as the BSE Sensex closed at 75,867.80 on 27 May, off a high of 86,159 on 1 December 2025. According to SLiQ, a Zerodha-backed platform, LAS reached a major turning point over the past 18 months, driven by increased promotional efforts by NBFCs and fintech companies. The platform disbursed about ₹225 crore in LAS in FY26 and crossed ₹100 crore in April and May this year, demonstrating the growing market acceptance of these alternative financing solutions.
LAS and LAMF are typically structured as overdraft facilities with borrowers paying interest only for the number of days the money is used. If the pledged mutual fund is equity-heavy, lenders usually offer 50% of its value as a loan, while debt-heavy funds can access up to 80% of their value. Interest rates are usually between 9.5% and 10.5%. Lenders maintain margin requirements due to market-linked collateral, with borrowers receiving margin calls if pledged securities fall sharply, requiring either loan repayment or additional securities pledge. Failure to meet margin requirements within the deadline can result in forced liquidation at low market points.
Financial experts recommend conservative borrowing practices to avoid portfolio risks. As reported by Sahaj Money, borrowers should limit their borrowing to a conservative portion of their total eligible limit, such as 30% to 40%, rather than maxing out the allowed credit line. Additionally, pledges should be in liquid large-cap assets rather than small caps to minimize market volatility exposure. Failure to meet margin requirements can result in permanent portfolio losses and lower credit scores, making proper risk management essential for successful LAS utilization.
