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RBI Expands Loan Against Shares Limit to Boost Secured Borrowing
2 Oct
Summary
- RBI raises loan against shares limit from ₹20 lakh to ₹1 crore
- Zerodha CEO calls it a "good change" to make LAS more popular
- Many investors still rely on high-interest personal loans or credit cards
In a recent development, the Reserve Bank of India (RBI) has raised the limit for loans against shares from ₹20 lakh to ₹1 crore. This change, which took effect last month, has been welcomed by Nithin Kamath, the co-founder and CEO of Zerodha.
Kamath, in a post on X (formerly Twitter), described the RBI's move as a "good change" that could help increase the visibility and usage of Loan Against Securities (LAS) products among retail investors. He pointed out that despite holding stocks, many people continue to rely on personal loans or credit cards that come with much higher interest rates, sometimes reaching over 40%.
Referring to Zerodha's own lending business, Kamath noted that even at their platform, they constantly see this trend, as "people just aren't aware they can replace high-interest debt with LAS." He believes the enhanced LAS limit will promote secured lending in the capital markets and offer investors an alternative to costly unsecured loans.
The RBI's decision is part of a broader set of reforms aimed at increasing credit access and reducing borrowing costs. The central bank has also raised the IPO financing cap, eased norms for M&A funding, and enhanced lending flexibility for banks. These changes are expected to benefit investors and businesses alike.
