Loan Against Bonds: Unlock Liquidity Without Selling Investments

What is a Loan Against Bonds?

Bonds are a great investment tool, offering stable returns over time. But what if you need urgent cash and don’t want to sell your bonds? A loan against bonds allows you to unlock liquidity while keeping your investments intact.

This guide will explain how to get a loan against bonds in India, the interest rates, eligibility criteria, and the benefits of using bonds as collateral.

A loan against bonds is a secured loan where you pledge your bonds as collateral to a lender (bank or NBFC) in exchange for funds. The loan amount depends on the value of your bonds, and you continue earning interest from them even while they are pledged.

This is an excellent way to access funds without selling your investments, making it a preferred option for investors in need of liquidity.

Key Features of Loan Against Bonds

✅ Loan Amount: Generally, lenders offer 50-80% of the bond value as a loan.

✅ Interest Rate: The loan against bonds rate of interest varies between 8-12% depending on the lender and bond type.

✅ Tenure: Typically 12 months, but it can be extended.

✅ Collateral: Government bonds, corporate bonds, and PSU bonds are accepted.

✅ No Impact on Bond Ownership: You retain bond ownership and continue receiving interest payments.

Benefits of Taking a Loan Against Bonds

🔹 Instant Liquidity: Get quick access to funds without selling your investments.

🔹 Lower Interest Rates: Loan against bonds interest rates are lower than personal loans or credit cards.

🔹 Retain Bond Benefits: Continue earning interest payouts on your pledged bonds.

🔹 No Prepayment Charges: Some lenders allow early repayment without penalties.

🔹 Flexible Repayment Options: Choose from EMIs or bullet payments at the end of tenure.

Eligibility Criteria for Loan Against Bonds in India

To apply for a loan against bonds, you must:

✔️ Be an Indian citizen (18 years or older)

✔️ Own eligible government, corporate, or PSU bonds

✔️ Have a demat account where the bonds are held

✔️ Meet the minimum bond value requirement set by the lender

How to Apply for a Loan Against Bonds?

Step 1: Choose a Lender

Compare banks and NBFCs that offer loans against bonds. Popular options include ICICI Bank, Bajaj Finserv, Tata Capital, and others.

Step 2: Submit Documents

Provide KYC documents (Aadhaar, PAN), bond details, and loan application.

Step 3: Loan Approval

The lender evaluates your bond value and eligibility before sanctioning the loan.

Step 4: Pledging of Bonds

Your bonds are marked as collateral, but you still earn interest on them.

Step 5: Loan Disbursal

Once the process is complete, funds are credited to your bank account.

Final Thoughts

A loan against bonds is a smart financial tool that helps investors access funds without liquidating their assets. It offers low interest rates, flexible repayment options, and continued bond earnings, making it a preferred option over selling bonds.

💡 Looking for a loan against bonds? Explore top options on TapBonds and unlock liquidity today! 🚀