InvestorQ : Is a borrower’s overdraft limit fixed while taking a loan against securities (LAS)?
varsha Motwani made post

Is a borrower’s overdraft limit fixed while taking a loan against securities (LAS)?

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Deepali Khupte answered.
3 years ago
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Let’s first understand what an overdraft is. An overdraft facility is an extension of credit from a lending institution. This facility allows the individual to continue withdrawing money even if the account has no funds in it or not enough to cover the withdrawal.

Basically, overdraft means that the bank allows customers to borrow a set amount of money.

With respect to whether your overdraft limit is fixed while taking a loan against securities (LAS), well, this completely depends on the market rate of the securities that you have pledged.

A lender will value your portfolio periodically to determine your overdraft limit. This means that your overdraft limit can fluctuate from time to time.

You can increase your overdraft limit by pledging more shares/securities or decrease the limit by de-pledging some of them. The choice is totally yours!

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