Mr. Nikhil Shah
D.G.M. - Loan Portfolio – NJ Group
Mr. Nikhil has over 24 years of corporate experience in diverse areas of product development, marketing, product management, etc., and across industries like consumer appliances, insurance and real estate. He also has prior experience in reviving sick units and was a visiting faculty to management institutes. Nikhil joined NJ about nine months back and is responsible for deve loping the loan business at NJ. Nikhil is a BE in Industrial Engineering and is an MBA in Marketing.
Q. Kindly provide a detailed understanding on Loan Against Securities (LAS).
Nikhil: LAS stands for Loan against Securities. LAS is the finance / loan available to clients against investments in capital market. It provides liquidity without liquidating your investments, at times when funds are required in an urgency. The securities like Equity/Debt mutual funds, shares, RBI Bonds etc., are pledged and against these securities loan is available at very competitive rates between 10.25 to 11.00 %.
Many times the investor is in urgent need of money for short term requirements i.e. from 3 months to a year for bridge finance, child education, short term working capital needs, margin money to buy a house, etc. He would most likely redeem his investments and miss the opportunity to create wealth. Here the channel partner will also lose the trail income on redemption. The financial reforms initiated by Modi government are likely to yield exponential returns for investors over the next decade. So instead of redeeming units or stopping SIP, LAS is a boon for such investors.
The client can get the loan sanctioned against pledged securities and can operate it as an OD (Over Draft) account. The interest on loan is charged only on the fund utilized by the client. He can repay the loan partially / fully any time as per his convenience. There are no foreclosure charges.
The channel partners can help the investors by guiding them to take a loan against their investment and fill in the temporary gap and can earn additional trail income on the fund utilized by the investors. So it is a win-win situation for both, the Partner as well as the Investor.
Q. What is NJ's approach towards LAS?
Nikhil: We are happy to share with you that NJ is the first company in India to launch Online Loan Against Securities, a landmark step towards business digitalization.
You can apply for a loan from the Partner Desk or E- wealth account. Securities are pledged and E-signed and loan is sanctioned immediately. No physical documents are required for the sanction. Funds are dispensed within 24 hours of the receipt of IVR (Interim Valuation Report) and is transferred to the investor's account.
Q. How to apply for LAS?
Nikhil: You can apply for the loan through Partner Desk or E- Wealth account. LAS is available to individual clients only whose securities are invested through NJ's Demat A/c. Client has to upload a soft copy of his PAN card and a cancelled cheque (with his name printed) / Bank statement in JPEG format. Aadhar authentication is also needed for E- signing the documents and pledging. The loan amount will be credited to his bank account within 24 hours.
Further, you can go through this presentation: How to Apply For LAS for detail understanding of the flow/process.
Q. Please share the details on the Interest charged and capital repayment options.
Nikhil: Interest is calculated on the funds utilized by the client between 7th of the month to 7th of the next month and is debited from his account between 7th to 10th. Every month the interest is debited from the client's bank account through NACH. As a part of the process, the Partner has to take a printout of the NACH mandate form, fill it and get it duly signed by the client. Submit the form to the respective branch and it will be forwarded to the finance company.
There is a separate account for the principal repayment. Client can do the repayment partially or fully through online platform.
Q. How to release the pledged securities?
Nikhil: Client can get the pledged securities released simply by sending a mail to the finance company.
For the foreclosure of the loan, the client has to first repay the principal amount plus any interest due to the finance company. From his registered e-mail id, the client has to send a request for releasing the securities in a specified format. If all dues are paid, then the securities are released/unpledged within 24 to 48 hours of the request.
Client also has the option of partially unpledging his securities, if he is not utilizing the fund against those securities.