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Loans against shares is a viable option for those borrowers who wish to raise definite amounts fast and also at much lower interest rates compared to personal loans. Both private and public sector banking offers such kind of opportunities. This is an easy way to get immediate loans for tiding over financial crisis looming large. There are lots of benefits associated with this kind of arrangement. Any overdraft which gets taken in lieu of the shares requires payback of only the utilized amounts. However how easy it is going to be to get loan amounts against shares depend upon both the type of share as well as its market value in the current as well as the future scenarios. Out of demat and physical shares, it is easier and faster to get loans against the demat varieties compared to the physical shares. Quicker loans, low interest rates and longer tenures, these are some of the benefits associated with the demat shares. Up to 65% of the market value can be drawn as an overdraft against a share. However this decrease up to only 50% when one is dealing with physical shares. The criteria for getting a loan against shares from banks There are different criteria involved in getting a loan against shares through the investment banking procedure. First and foremost of all, the share in question needs to be present within the approved list available with the bank. Also complete payment should be made with regards to the share before asking for a loan from the banks. It is important to remember that the director of a company is never in a position to gain loans against shares of the same organization. If and when the market value of the shares against which the loans has been taken decreases, the banks notify the client regarding the same. In such cases, either more shares need to be deposited to complete the deficit or equal amounts need to be paid within a given time frame. This is necessary to keep the loan alive and kicking. Documentation needs for getting loan against share As in every formal transaction here also in order to gain loan against share it is necessary to complete the relevant paperwork. Certain documents need to be submitted for completing the process. First and foremost for the transaction form need to be filled out and then submitted to the relevant bank. Also, dividend warrant copies, physical share certificates, valid and signed up transfer deeds and a company cover letter needs to accompany the form to be submitted for consideration. Benefits associated with a loan against share A number of benefits associated with a loan against share make this a highly popular choice indeed. Interest gets charged only on the amounts drawn against the share in question. Also, this interest is only for the period of time for which the loan gets taken. No guarantors are required for getting this kind of loans and this makes it the hassle-free business on all counts.
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