Sahare Wealth · Loan against bonds
Hold bonds? Borrow without selling
Pledge your bonds to raise money and keep them until maturity. You keep earning the coupon, but the lender can ask for more security if bond prices fall. Know both sides first.
- Keep the bonds
- Risks explained upfront
- Help from Nagpur
The basics
How a loan against bonds works
You borrow against bonds you already hold. They are the lender's security until you repay.
Step 1
Your bonds are the security
The lender marks a lien on bonds in your demat account. They remain yours.
Step 2
You get a limit
The limit is a percentage of their value. It varies by lender and by the kind of bond.
Step 3
Repay and release
After repayment the lien is removed and the bonds are fully yours again.
Process
Getting a loan against your bonds
Bonds must be in demat form. The pledge is approved by you through your depository.
Check eligibility
Lenders accept only certain bonds. Government securities and highly rated bonds are more likely to qualify than unrated or low-rated ones.
Apply and complete KYC
Share your PAN and Aadhaar details, and link your bank account.
Approve the pledge
You confirm the pledge through your depository participant, usually with an OTP. Pledged bonds cannot be sold.
Use the money and repay
Draw what you need, pay interest, and repay. Then the pledge is released.
Compare
Which bonds are usually accepted?
| Type of bond | Often accepted? | What to know |
|---|---|---|
| Government securities | More likely | Backed by the government. Prices still move with interest rates. |
| Highly rated company bonds | Sometimes | The lender checks the issuer's rating and the bond's liquidity. |
| Tax-free and PSU bonds | Sometimes | Acceptance depends on the lender and the bond's trading volume. |
| Low-rated or unrated bonds | Rarely | Most lenders avoid them because of credit risk. |
| Bonds held in physical form | Generally no | Convert to demat first. |
Before you borrow
Risks to understand
Falling bond value can mean a margin call
If the value of your pledged bonds falls, the lender can ask you to repay part of the loan or pledge more security. If you don't act in the time given, the lender can sell the bonds to recover its money, even at a loss to you.
Interest rates move prices
When market interest rates rise, bond prices usually fall. Keep a buffer; don't borrow your full limit.
Rating downgrades
If the issuer's rating falls, the bond's value and acceptability can drop quickly.
Cost versus coupon
Loan interest can be higher than the coupon you earn. Check the net cost.
Pledged means locked
You can't sell pledged bonds until the pledge is released.
Only registered lenders
Borrow only from banks and NBFCs registered with RBI. Check on RBI Sachet (opens in a new tab).
Read the agreement
Understand the margin call timeline, charges and what happens on default before you sign.
Questions
Frequently asked questions
Do I still get the coupon on pledged bonds?
Generally yes, because the bonds remain in your name. Confirm with the lender how interest payments and maturity proceeds are handled while the bonds are pledged.
Which bonds can I pledge?
It depends on the lender. Government securities and highly rated bonds in demat form are the most likely to be accepted. Ask us before you apply.
What happens when a pledged bond matures?
The maturity amount is usually applied to your loan first, and the balance comes to you. The lender's terms decide the details.
What is a margin call?
A request from the lender to repay part of the loan or add more security when the value of your pledged bonds falls.
Is it the same as a loan against shares?
The idea is similar, but bonds behave differently from shares. See our Loan Against Securities page to compare.
What interest rate will I get?
It depends on the lender and your profile. Ask us for current options.