With Loans Against Bonds, you can get funds using your bond investments, without selling them. A Loan Against Bonds enables you to get funds by pledging your bonds as collateral while retaining their ownership. This loan offers you flexibility and convenience, whether you are meeting an urgent financial requirement or planning an important expense.
Loan Against Bonds is designed to make your investments work for you without liquidating them. Let's explore its features, types and benefits and learn how to avail this Loan.
What is a Loan Against Bonds?
A Loan Against Bonds is a loan given to investors against the bonds they hold. Bonds act as collateral, allowing the Bank to sanction loans based on the bonds’ current value. This means you can meet your financial needs without selling your investments and continue getting benefits such as interest earnings / dividends.
Here’s the process by which you can avail a Loan Against Bonds:
- Pledge Bonds: You pledge your bonds as collateral to ICICI Bank
- Evaluation: The Bank assesses the market value of the bonds and decides the Loan amount for which you are eligible
- Sanctioning: Once the Loan is approved, the Loan amount will be disbursed
- Repayment: You can repay the Loan by cash, cheque or Demand Draft, after which the bonds are released.
Types of Loans Against Bonds
ICICI Bank accepts various types of bonds as collateral. Here are the most common ones:
- Government Securities (G-Secs)
- Sovereign Gold Bonds (SGBs)
- Tax-Free Secured Redeemable non-convertible Bonds.
Benefits of Loans Against Bonds
There are many benefits of opting for a Loan Against Bonds, such as:
- Overdraft Facility: ICICI Bank's Loan Against Bonds allows you to access funds without selling your investments. The Loan is offered as an overdraft facility, providing flexibility to meet your financial needs.
- Ownership Retention: You continue to own your bonds, allowing you to earn interest or dividends while benefiting from their potential appreciation.
- Lower Interest Rates: Secured loans generally have lower interest rates than unsecured loans such as Instant Personal Loan.
- Quick Access to Funds: Since the collateral is readily available, the Bank can process and disburse the Loan more quickly.
- Flexible Loan Amounts: The Loan amount is linked to the value of your bonds, which can range from a few thousand rupees to several crores.
- Cost-Effective: Minimal processing charges make this an affordable borrowing option.
When is taking a Loan Against Bonds Beneficial?
Loan Against Bonds is beneficial in conditions such as:
- Emergencies where immediate liquidity is required
- To meet financial obligations like education fees, medical expenses or business requirements
- When you need funds without disturbing your existing investments.
Eligibility Criteria to Avail a Loan Against Bonds
To avail a Loan Against Bonds, you need to meet certain eligibility criteria set by ICICI Bank, as listed below:
- You must be at least 18 years old
- You can be an individual or a part of a Hindu Undivided Family / a Trust
- You must be an Indian citizen with valid identification documents
- The bonds must be in your name and in dematerialised (demat) form
- While not always mandatory, a good credit score may improve your chances of approval.
Documents Required to Apply for a Loan Against Bonds
ICICI Bank requires the following documents to assess your application for a Loan Against Bonds:
Document Type |
Details |
|---|---|
KYC Documents |
PAN Card and Aadhaar Card / Passport / Voter ID |
Bond Certificate |
Proof of ownership in dematerialised form |
Income Proof |
Salary slips, bank statements or IT returns |
If you are applying on behalf of a company, proprietorship or partnership firm, you will also need to provide:
- Income Tax Returns
- Audited Balance Sheet
- Profit and Loss Account for the last 2 years.
How to Apply for a Loan Against Bonds?
You can apply for a Loan Against Bonds by visiting any ICICI Bank Branch. For additional information, please call our Customer Care on 1800 1080.
FAQs
Q1. What is a Loan Against Bonds?
A Loan Against Bonds is a secured loan where individuals pledge their bonds as collateral to borrow funds.
Q2. Is a CIBIL score necessary to take a Loan Against Bonds?
While not always mandatory, a good credit score can enhance your chances of approval and help you get favourable Loan terms.
Q3. How can I close my Loan Against Bonds?
You can close the Loan by repaying the full outstanding amount along with any accrued interest. Once repaid, your bonds will be released by the Bank.
Q4. How much Loan amount can I get against my bonds?
The Loan amount typically ranges up to 80% of the bonds’ market value.
- The minimum loan amount is ₹ 50,000
- The maximum loan amount is ₹ 5 crore.
T&C apply.
Conclusion
A Loan Against Bonds is a smart way to get quick funds without selling your investments. By pledging your bonds with ICICI Bank, you can borrow funds while still earning interest on your bonds. The Loan is given as an overdraft, making it easy to use the money as needed. Whether it's for personal needs, business requirements or emergencies, ICICI Bank’s Loan Against Bonds helps you access funds while keeping your investments safe.