A Loan Against Shares (LAS) is a financial product that allows individuals to obtain a loan by pledging their existing securities, such as stocks, mutual fund units, or bonds, as collateral. The borrower continues to own and receive the benefits of the pledged securities, such as dividends or interest payments, but they use these securities as security for the loan.

Here's how it generally works:

Collateral: The borrower pledges a certain percentage of the market value of their securities as collateral for the loan.

Loan Amount: The lender provides a loan amount based on the value of the pledged securities. The loan-to-value (LTV) ratio determines how much one can borrow against the market value of the securities.

Interest Rates: The interest rates on loans against shares can vary and are typically lower than unsecured loans because the lender has the securities as collateral.

Repayment: The borrower needs to repay the loan within a specified period. If the borrower fails to repay, the lender may sell the pledged securities to recover the outstanding amount.

Market Fluctuations: Since the loan is secured against the market value of securities, fluctuations in the market can affect the loan amount. If the value of the securities falls significantly, the lender may ask the borrower to either pledge additional securities or repay a portion of the loan.

Risk: While LAS provides liquidity without selling the securities, there is a risk of losing the pledged assets if the borrower is unable to repay the loan.

This type of loan is often used by investors who need funds but do not want to sell their securities, especially if they believe the value of the securities will appreciate over time. It's important for borrowers to carefully consider the terms, interest rates, and potential risks associated with loans against shares before opting for this financial product.