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Loan against Securities Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM LOAN INTERVIEW QUESTIONS LOAN AGAINST SECURITIES INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Loan against Securities Interview Questions & Answers - Learning Mode

Loan against Securities (LAS) is a unique Overdraft Facility provided against the pledge of securities. It lets you capitalize on your investments by providing liquidity against your investments in marketable securities like equity shares, mutual funds, bonds and insurance policies and more through an overdraft facility.

Try Loan against Securities Interview Questions & Answers - Exam Mode

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Loan against Securities Interview Questions & Answers - Learning Mode
Try Loan against Securities Interview Questions & Answers - Exam Mode
Question: Can you tell me about PPF loans. What is the maximum amount I can borrow through a PPF loan?

Answer: Taking a loan against PPF is a good way to raise funds when faced with a financial emergency. Apart from taking a loan on PPF you also have the facility to partially withdraw funds from your PF account after seven years.

Loans on PPF accounts are eligible only for accounts between the 3rd to the 6th financial year. The maximum amount of loan you can get from your PPF account is fixed at 25% of the balance lying in your account at the end of the first financial year. For example if you app Source: CoolInterview.com
Question: Where can I get a loan against my life insurance policy?

Answer: Before seeking loan against life insurance you should know that life insurance plans like endowment policies, money back plans and unit linked insurance policies (ULIPs) are eligible for loans while term insurance plans are not eligible for any loans. You can avail loan against life insurance from banks as well as life insurance service providers. Both have their own criteria to arrive at the maximum loan amount and the rate of interest for your loan against life insurance depending on the amoun Source: CoolInterview.com
Question: I was planning to take a loan on insurance with a plan to repay in a couple of months but LIC says loans with a minimum tenure of six months. Is this the case with every insurance company?

Answer: The repayment options for a loan against life insurance can differ from one insurer to another. So Life Insurance Corporation for example offers loans with a minimum tenure of six months which means even If you wish to repay before six months, you have to pay interest for the full six month period. In some other companies you can even avail a loan for the remaining policy term and can prepay the loan without any charges. Source: CoolInterview.com
Question: I have a number of shares for various blue chip companies. I do not want to sell my shares as of now so is pledging them to the bank a good way to raise some liquid cash?

Answer: If you do not want to sell your shares and still want some liquid cash for a short period of time, you can consider pledging your securities for a loan. Most banks offers loan against securities depending on the company or stock you are holding. Bank selects the securities according to their market value and offer 50 to 70% of the loan amount to the borrower. Unlike other loans, you are charged an interest only on the amount withdrawn from the account depending on the time span the fund is utili Source: CoolInterview.com
Question: What is the maximum limit of loan i can get if i opt for loan against shares?

Answer: Your bank will be the final judge in selecting the securities according to their market value and offer 50 to 70% of the loan amount to the borrower. Usually the maximum loan amount applicable for many banks is 50% of the value of the shares to a maximum limit of Rs 20 Lakh and 50% lending on the NAV for mutual funds. Source: CoolInterview.com
Question: Can I opt for a loan on my term life insurance plan?

Answer: To answer your question in one line, no you cannot opt for a loan against your term insurance plan. However you can get a loan if you have any other life insurance policy along with a term plan. Since a term plan does not have any cash value associated with it is difficult for any bank or NBFC to mortgage the life insurance policy as security and give out any sum against the policy. Life insurance plans like endowment policies, money back plans and unit linked insurance policies (ULIPs) are elig Source: CoolInterview.com
Question: Are there any margin money requirements for loan against securities?

Answer: No, loan against securities come with no margin money requirements but are renewed after every 12 months. Bank selects the securities according to their market value and offer 50 to 70% of the loan amount to the borrower. One big advantage is you are charged an interest only on the amount withdrawn from the account depending on the time span the fund is utilized. Source: CoolInterview.com
Question: An NBFC I frequent is offering loans on mutual funds. I thought only banks were allowed to offer loan on securities. Can a NBFC offer loan against mutual fund?

Answer: While almost all banks offer loan against mutual funds, as per the guidelines of the Reserve Bank of India non banking financial companies of NBFC's with assets of more than Rs. 100 Crore can offer such a loan. Mutual fund loans are available for both equity and debt funds just like banks, the approved non banking financial companies also have a list of approved funds which they consider for loan. Source: CoolInterview.com
Question: Is it a good idea to opt for loan against shares? Is it better than personal loans?

Answer: There is never a black and white or good and bad while talking up a loan. It all depends on your financial history, the amount of loan you are seeking and your repayment plan.

If you are however confused between choosing loan over shares over a personal loan, I would say ?yes? since loan against shares or securities is far more pocket friendly compared to personal loans.

Each bank however has its own norms for mortgaging shares of the companies. Bank selects the securities accordin Source: CoolInterview.com
Question: I am faced with a severe short term financial crunch. Should I opt for a personal loan or take a loan against my fixed deposit?

Answer: Of course loan against fixed deposits is a better option in your case. Banks offer loans as high as 80 to 90% of the deposit amount of the fixed deposit. The interest rate is also nominal, usually 1 to2% higher than what is offered by the banks for the fixed deposit. On the downside if you are a salaried person you don?t get any tax benefits on the interest paid on loans against fixed deposits. While personal loans can be easily availed with some within one working day, since they are highly uns Source: CoolInterview.com
Question: What is the maximum amount I can get as a loan against my MF investments?

Answer: The amount of money you can get as a loan against mutual fund depends on the type of fund you own. For equity based mutual funds you can get as much as 50% lending on the net asset value of your funds. Some banks have a cap on the minimum and maximum loan amount you can avail when opting for loan against mutual funds. Source: CoolInterview.com
Question: Can you tell me about PPF loans. What is the maximum amount I can borrow through a PPF loan?

Answer: Taking a loan against PPF is a good way to raise funds when faced with a financial emergency. Apart from taking a loan on PPF you also have the facility to partially withdraw funds from your PF account after seven years.

Loans on PPF accounts are eligible only for accounts between the 3rd to the 6th financial year. The maximum amount of loan you can get from your PPF account is fixed at 25% of the balance lying in your account at the end of the first financial year. For example if you app Source: CoolInterview.com
Question: Will a loan against life insurance policy be denied if I have a low CIBIL Score?

Answer: Technically speaking your CIBIL Score is not checked if you are opting for a loan against life insurance policy. Therefore anyone with low CIBIL Score can also avail the loan although it is always advisable to maintain a decent credit score. If you are applying for a loan against life insurance from a bank and the bank is offering you an overdraft loan, then in that case the bank will check your CIBIL score. Also any default on your life insurance policy repayment can negatively affect your CIBI Source: CoolInterview.com
Question: Can tax saving fixed deposits be pledged as collateral?

Answer: No, tax saver fixed deposit investments cannot be pledged as collateral to secure any loan to meet your liquidity needs. Unlike normal fixed deposits tax saver fixed deposit investments come with no such provision. Since the sole purpose of these Five-year tax-saver fixed deposit schemes is to act as an investment vehicle that can double up as a effective tax saving instrument, such FDs do not come with any sweep-in facilities either. Also you do not have the option of premature withdrawal of in Source: CoolInterview.com
Question: How do loan against securities work?

Answer: Once you pledge the shares with the bank, the bank issues a current account for management of the loan. Unlike other loans, you are charged an interest only on the amount withdrawn from the account depending on the time span the fund is utilized. Problem is that not all shares and securities qualify for such a loan. Bank selects the securities according to their market value and offer 50 to 70% of the loan amount to the borrower. Source: CoolInterview.com

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