Loan against shares: In a recent update for retail investors looking to leverage their stock portfolios, the Reserve Bank of India (RBI) has capped loans against shares at Rs 1 crore per individual across the entire banking system, effective July 1, 2026.

There is no need to liquidate your investments, but there are new rules that you must know.

Rs 1 crore system-wide cap

Earlier in February 2026, the RBI issued amendment directions on capital market exposure, which were initially slated to kick in from April 1, 2026. Following industry feedback, the central bank has pushed this date to July 1, 2026.

"The caps on loans to individuals against eligible securities at Rs 1 crore per individual... shall be at banking system level,” RBI said.

This simply means a borrower cannot bypass the Rs 1 crore limit by taking multiple loans from different banks.

Rules for IPO, FPO, and ESOP 

The updated norms also tighten funding for primary market investments. The RBI said that the maximum loan amount an individual can secure for subscribing to shares under an Initial Public Offer (IPO), Follow-on Public Offer (FPO), or Employee Stock Option Plan (ESOP) is capped at Rs 25 lakh.

“Provided that the loan amount shall not exceed 75% of the subscription value, i.e., borrowers shall contribute a minimum cash margin of 25%,” RBI said.

What is a loan against shares?

Instead of selling your shares or stocks or mutual funds when you need cash, you can pledge them with a bank as collateral. The RBI referred to this as extending credit facilities against the collateral of eligible securities.

According to the central bank, eligible securities encompass a variety of assets, including listed Group-1 equity shares, preference shares, government securities, sovereign gold bonds, and mutual fund units.

However, you don't get 100% of the value of your portfolio. Banks apply a Loan-to-Value (LTV) ratio ceiling. For instance, the RBI has capped the LTV for listed shares and listed convertible debt securities at 60%. And If you pledge mutual funds (excluding debt funds), the cap is 75%, while for pure debt mutual funds, it goes up to 85%.

How to apply

Applying for a loan against shares is digitised today. Here are the basic guidelines to get started: Go to the official bank website of your preferred lender. Search for ‘loan against shares’ or ‘loan against securities.’ Click on apply, check eligibility, and fill out the online application. Then submit the details required to process.