RBI's new loan-against-shares limit kicks in — individuals can now borrow up to ₹1 crore
From 1 July 2026, RBI's revised Capital Market Exposure rules raise the system-wide cap on loans against shares and mutual funds for individuals from ₹20 lakh to ₹1 crore, with fresh LTV limits by security type.
The Reserve Bank of India’s amended Capital Market Exposure (Commercial Banks – Credit Facilities) Directions, 2026 took effect on 1 July 2026, after being deferred once from an original April 1 start date to give banks more time to comply. The headline change for retail investors: the limit on loans against shares (LAS) that an individual can take across the entire banking system jumps from ₹20 lakh to ₹1 crore.
What actually changed
- System-wide cap, not per-bank. The RBI has clarified the ₹1 crore ceiling applies to what one person borrows against securities across all banks combined — not ₹1 crore per lender.
- New loan-to-value (LTV) limits by collateral type:
| Collateral | Maximum LTV |
|---|---|
| Listed shares and convertible debt | 60% |
| Mutual funds, ETFs, REITs, InvITs | 75% |
| Debt mutual funds | 85% |
- IPO, FPO and ESOP financing is separately capped at ₹25 lakh per individual at the system-wide level, and loans up to ₹25 lakh can also be extended for buying securities in the secondary market.
- Banks financing corporate acquisitions (mergers and amalgamations of non-financial companies) now operate under a clearer, principles-based framework instead of the older restrictive norms.
Why this matters to you
If you hold a sizeable equity or mutual fund portfolio and occasionally borrow against it for liquidity — instead of selling and triggering capital gains tax — this rule directly raises how much you can access. Someone with a ₹1.5 crore mutual fund portfolio, for instance, could previously pledge shares for only ₹20 lakh system-wide; from July 1, the same portfolio can support borrowing up to ₹1 crore, subject to the LTV caps above.
The flip side: because the cap is tracked across the whole banking system, lenders will need to check your existing loan-against-securities exposure with other banks before sanctioning fresh credit — expect banks to ask for a declaration or NDS/credit bureau check on existing LAS facilities before your next drawdown.
What to do now
- If you rely on LAS for short-term liquidity, ask your bank whether your facility has been re-priced or re-limited under the new LTV bands.
- Remember debt mutual funds get the most favourable 85% LTV — useful if you need to raise cash without disturbing an equity allocation.
- Don’t treat the higher ₹1 crore ceiling as a reason to over-leverage; a market fall can trigger a margin call and forced sale of the pledged securities.
Sources: BusinessToday — Loans against shares capped system wide at Rs 1 cr: What investors should know, Moneylife — Capital Market Exposure Norms Deferred to July 2026, RBI Issues Key Clarifications.
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