What happens to my loan against shares/securities (LAS) if the price of my securities rises?
Answer
Answer
As securities/shares are the only collateral you provide in a loan against securities/shares (LAS), its valuation is of extreme importance.
If the value of your shares drop, your lender might ask you to furnish additional security or prepay the loan (at least a portion of the loan). However, if you don’t do either, the lender can liquidate your security and recover the loan amount.
In contrast, nothing will happen if the value of your securities rises. You might not get an additional loan. However, in case of overdraft, the bank might consider increasing your drawing power.