Building Tech for Loan Against Securities (LAS): How the Ecosystem Enables Seamless Solutions

Unlocking Liquidity with Loan Against Securities (LAS)

In today’s fast-evolving financial landscape, individuals and investors are constantly seeking ways to unlock liquidity without liquidating their hard-earned investments. Enter Loan Against Securities (LAS) - a powerful financial tool that allows borrowers to leverage their existing securities to access funds while keeping their investment portfolios intact. With the rise of digital platforms and mobile apps, LAS is becoming more accessible than ever, especially in a dynamic market like India. Here’s a deep dive into what LAS entails, the key players involved, and how seamless it has become to build a mobile app for lending against securities.

What is Loan Against Securities (LAS)?

Loan Against Securities is a financing option where borrowers pledge their financial assets - such as stocks, mutual funds, bonds, or insurance policies - as collateral to secure a loan. Instead of selling their investments, individuals can borrow funds against them, typically at competitive interest rates, while retaining ownership and the potential for future gains. In India, LAS has gained traction as a flexible and efficient way to meet short-term liquidity needs, whether for personal expenses, business funding, or emergency requirements.

The process is straightforward: the borrower pledges their securities, the lender evaluates the collateral’s value, and a loan is disbursed, usually ranging from 50-80% of the asset’s market value (known as the Loan-to-Value or LTV ratio). Once the loan is repaid, the securities are unpledged, returning full control to the borrower.

Key Players in the LAS Ecosystem
The LAS framework involves three critical stakeholders working in tandem:

1. Borrower/Investor with Holdings: This is the individual or entity holding securities - be it equity shares, mutual fund units, or other eligible assets - who needs liquidity but doesn’t want to sell their investments.
2. Intermediaries for Pledging Assets (API Providers): These are the technology-driven facilitators that make LAS seamless. Intermediaries such as depositories (e.g., NSDL, CDSL), API providers, and fintech platforms handle the pledging process. Notably, CAMS (Computer Age Management Services) and KFintech (KFin Technologies) play a pivotal role in the Indian market, especially for Loan Against Mutual Funds (LAMF). They provide APIs that enable secure and efficient pledging, revoking, and invoking of mutual fund assets. These Registrar and Transfer Agents (RTAs) integrate with lenders and depositories to verify holdings, mark liens on mutual fund units, and ensure compliance with regulatory norms set by SEBI and RBI. Their APIs streamline the process, offering real-time data and automation for a paperless experience.
3. Lender Providing the Loan: Banks, Non-Banking Financial Companies (NBFCs), and fintech lenders are the primary institutions offering LAS. They assess the collateral, determine the loan amount, and disburse funds. Leading players in India include HDFC Bank, ICICI Bank, Bajaj Finance, and newer fintech entrants leveraging technology for faster processing.

Building a Mobile App for LAS: Embedding Convenience
The digitization of financial services has paved the way for mobile apps to become the go-to solution for LAS. Such an app can either be a standalone platform or embedded into existing mobile banking or investment apps through hosted flows or SDKs (Software Development Kits). Here’s how it can transform the LAS experience:

• Seamless Integration: By embedding LAS functionality into an existing app (e.g., a stock trading or mutual fund platform), users can access loans without leaving their familiar ecosystem. Hosted flows allow lenders to offer a white-labeled solution, while SDKs enable customization for a branded experience.
• End-to-End Automation: A well-designed app can handle everything - from showcasing eligible securities and calculating loan amounts to pledging assets and signing agreements - all within a few taps.

KYC and Loan Disbursement Made Simple
Regulatory compliance is a cornerstone of LAS, and mobile apps can streamline this process:

• Digital KYC: Using Aadhaar-based e-KYC or video KYC, borrowers can verify their identity in minutes, adhering to RBI guidelines. APIs from trusted providers can fetch and validate user data securely.
• Loan Disbursement: Once KYC is complete and securities are pledged, the app can trigger instant loan disbursement to the borrower’s bank account. Real-time updates on loan status enhance transparency and trust.

Flexible EMI Collection
Repayment is a critical aspect of LAS, and mobile apps can offer borrowers flexibility and control:

• Customizable EMIs: During the loan application process, users can select their preferred repayment tenure and EMI amount based on their financial capacity. The app can display a repayment schedule upfront.
• Automated Collections: With integrations like NACH (National Automated Clearing House) mandates, EMIs can be deducted automatically from the borrower’s account, reducing the risk of defaults. Push notifications and reminders ensure borrowers stay on track.

Why LAS Apps Are Growing & the Disbursements Are Increasing in Alarming Numbers:
India’s booming investment culture and widespread smartphone adoption make LAS apps a perfect fit. They empower investors to access liquidity without disrupting long-term goals, while businesses save time and resources by leveraging pre-built tools. As the Indian market embraces digital transformation, building a mobile app for Loan Against Securities isn’t just an opportunity - it’s a necessity. By bridging the gap between investors, intermediaries, and lenders, these apps can redefine how liquidity is accessed, making financial flexibility a reality for millions.

For fintechs and banks, embedding LAS via our SDKs or workflows - powered by intermediaries like CAMS and KFintech - unlocks cross-selling opportunities and boosts customer retention without the headache of coding from scratch.

Are you ready to tap into this growing space? The future of LAS is mobile, and the time to seize this opportunity is now!