Financial emergency does not come with an invitation, instead it can drop in on you at anytime. A person needs financial assistance on several occasions such as for heavy expenses in a month like weddings, education fees and more. In such cases, getting instant cash can be tough. However, the lending procedure from banks have advanced in the last few years, and in fact disbursement of loans have also become quick and flexible. However, even before approving your loans, banks do consider accurate KYC norms, your past dues, credit score and monthly income. This can still take some time, when you are in urgent need of money.
But guess what! Your investment in equity shares can help you avail loan up to maximum Rs 20 lakh. This is exactly what the largest lender State Bank of India (SBI) is offering their customers. 

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On the website of SBI Online it is mentioned that, this facility is available to our existing individual customers enjoying a past satisfactory relationship with SBI and maintaining their DEMAT Account with SBI Cap Sec. It is offered as an Overdraft or Demand Loan. Loan can only be availed in single name. However, NRIs are currently not eligible for this loan.

This type of loan from SBI, will be permitted for subscribing to rights or new issue of shares against the security of existing shares. Loan will not be sanctioned for (i) speculative purposes {ii) inter-corporate investments or (iii) acquiring controlling interest in company / companies.

Minimum Rs 50,000 loan can be availed, while the maximum amount can go upto Rs 20 lakh. Notably, loan against shares not to exceed Rs 10 lacs if the purpose is for subscribing to IPOs. 

Coming back to interest rates levied on loan against shares, SBI charges 3.15% above 1-year MCLR benchmark. That said, currently SBI has 12.05% interest rates per annum on this loan, which currently is lowest compared loan against other securities. 

It needs to be noted that, a customer will need to provide a margin amount of 50% of the prevailing market prices of the shares being offered as security at SBI. 

However, SBI also levies 0.75% of the loan amount with minimum of Rs 1,000 plus GST on these loans as processing fees. Hence, if you have equity shares and in need of loans, then you might want to check out SBI’s loan against shares product. 

Here's how you can apply: 

Step 1 - To apply click on https://retail.onlinesbi.com/las/loanagainstsharesinit.htm

Step 2 - You will be directed to a page showing features of this loan against shares. Below an option stating 'Apply Now' will be mentioned. Click on it!

Step 3 - Go through the guidelines, terms and conditions for filling up online application form. Then click on Proceed option mentioned at the end of the page.

Step 4 - You will be directed to a list of shares page which are available for opting loan. Select your shares. Fill in the quantity bracket and total price. And then Click Submit. 

(Image source: SBIOnline)

It needs to be noted that, although shares are pledged, it will remain in your name only.

You can repay the loan at any point of time during the loan tenor by repaying the due interest and principal loan amount through RTGS / NEFT / Cheque.