Loan Against Shares in India: RBI's New ₹1 Crore Cap and What Changes From July 2026

If you hold a demat portfolio and have avoided selling shares to raise cash, a loan against shares lets you borrow without triggering capital gains tax on a sale. From July 1, 2026, RBI's amended capital market lending norms reshape exactly how much you can borrow this way — raising the individual cap sharply, but also closing a loophole that let some borrowers stack limits across multiple banks.

What Actually Changed

The headline change is the five-fold jump in the individual cap, from ₹20 lakh to ₹1 crore. But the more structurally important change is that the new ₹1 crore limit is aggregated across the entire banking system for a given individual, not reset at each bank you approach — closing a gap where a borrower could previously take ₹20 lakh loans against the same shares (or different shares in the same portfolio) at several different lenders simultaneously.

Why the Deadline Moved From April to July 2026

The new rule was originally set to take effect April 1, 2026. Banks and industry participants flagged operational and interpretational issues with implementing the system-wide aggregation requirement in time, and RBI granted a three-month extension, pushing the effective date to July 1, 2026 — meaning this rule has been in force for only around two weeks as of this article's publication.

How the Loan Actually Works

A loan against shares is structured as an e-pledge: your shares must be held in demat form with NSDL or CDSL (physical share certificates don't qualify), and you initiate the pledge directly through your depository participant or the lending bank's platform. The bank sanctions a credit limit based on the pledged shares' value, and — much like a loan against mutual funds — you're typically not selling anything, so no capital gains tax event is triggered by taking the loan itself.

LTV and Interest Rates in Practice

Loan-to-value ratios and interest rates vary meaningfully by lender and by the shares pledged. As a rough guide, banks currently lend up to roughly 50-55% of the value of pledged equity shares (ICICI Bank, for instance, goes up to 55%, subject to the new ₹1 crore cap), at interest rates broadly in the 9.5%-16% p.a. range depending on the lender and your overall relationship.

Margin Call Risk Is the Real Cost of This Facility

The headline interest rate isn't the only cost that matters here. Because the loan is secured against share prices that move daily, a sharp market fall can push your loan-to-value ratio above the sanctioned limit, triggering a margin call — you'll need to either pledge additional shares or repay part of the loan quickly, often within a very short window. Borrowing near the maximum permitted LTV leaves very little cushion before a routine market correction forces this decision on you.

Loan Against Shares vs the Alternatives

If you're weighing this against other secured borrowing options, our guide to loan against mutual funds in India covers the equivalent facility for fund units rather than direct equity holdings — mechanically similar, but with different LTV bands depending on whether the underlying fund is equity or debt. For a comparison against unsecured borrowing, see personal loan vs credit card, and for a different class of secured loan entirely, loan against property vs personal loan walks through when pledging property beats pledging financial assets.