Finance

Tata Capital Launches Digital On-boarding Journey For Loan Against Shares

July 11, 2022 by Investors and Startups

Tata Capital Ltd, already known for its one-of-a-kind and unparalleled financial facilities, has recently made yet another staggering announcement. The company has launched digital on-boarding journey for Loan against Shares.

As a part of the launch of the facility, Abonty Banerjee, the Chief Digital Officer of Tata Capital, said that the digital LAS offered by the NBFC will help its customers meet their financial requirements conveniently. She further said that Tata Capital is confident that its newly – launched credit facility will benefit its customers.

Tata Capital has introduced the facility via its digital customer service portal, which can be used for placing pledge requests digitally with the help of NSDL API and get the same approval from the respective depository participants (DPs). The availability of this online facility is expected to make the process of availing credit against shares highly convenient and quick.

How Does the ‘Loan Against Shares’ Facility Work?

Loan Against Shares is a facility where people can take Loan Against Shares in their Demat account as collateral. The maximum amount an individual can avail is determined by a percentage of the total market value of shares present in the portfolio of the individual.

In India, banks can lend a maximum of Rs. 20 Lakh under a single entity under the LAS facility. However, by being a Non-Banking Financial Corporation (NBFC), Tata Capital can offer up to Rs. 5 Crore credit under the LAS facility. Tata Capital is one of the first NBFCs who offer an end-to-end integrated digital onboarding experience for Loan Against Shares.

Who is Eligible for Tata Capital’s LAS Facility?

The eligibility criteria for availing Tata Capital Loan Against Shares facility are as follows –

  1. Individuals: Salaried and self-employed individuals who fall in the age bracket of 18 to 65 years are eligible for the LAS facility.
  2. Non-Individuals: Entities that have existed for at least the last two years are eligible for the credit facility.

Documents Required for Loan Against Shares Facility:

To avail this facility, one needs to submit the following documents:

  • A photo ID proof such as Aadhaar Card, PAN Card, etc
  • Address proof such as Passport, Utility Bill, Bank Passbook, etc.
  • Last six month’s bank statement
  • Income Tax Return for the last two years
  • Last three months’ salary slips
  • 1 Security Cheque
  • A Passport-sized photograph

What are the Key Benefits of the Tata Capital LAS Facility?

One can enjoy the following benefits by availing of the LAS facility with Tata Capital –

  • Online Process: The process, from application, account creation, pledging of shares, and identity verification to the transaction of the amount, can be completed online. No paperwork and no branch visits are required. One can also electronically sign their documents and benefit from the e-Nach facility.
  • Retention of Ownership: When one pledges their shares to avail of a loan from Tata Capital, they continue retaining their ownership over their shares. They can continue to benefit from the returns generated by their investment in the share market, as they need not liquidate them.
  • Zero Scope of Error: With Tata Capital’s online onboarding and customer servicing platform, the risk of document error stands at zero, be it the ones submitted to the NBFC or those exchanged with the DPs. Thus, it helps in avoiding the risk of rejection of their application and delays in processing the loan amount.
  • Interest Payable on Utilised Loan Amount Only: When one avails the LAS facility with Tata Capital, they only need to pay the interest on the amount utilised as a loan by them and not the total credit extended by the NBFC. The remaining credit line can be used as an overdraft facility.
  • 1-Day Processing of Loan: Once the documents submitted by the individual are verified, the shares are pledged and final approval is given, then it takes only a day for the individual to receive the entire loan amount.
  • No Foreclosure or Prepayment Penalty: One can pay back the loan amount whenever they want, even if it is just 1 or 2 days right after the loan disbursement from Tata Capital. The NBFC charges no foreclosure or prepayment penalty.

Wrapping Up:

With the LAS facility offered by Tata Capital, one can leverage their investment to fulfil their credit requirements while enjoying returns from their investment. All one needs to do is pledge their shares digitally, and they can get a loan of up to Rs. 5 Crore!