Edelweiss Loan against Shares

The Edelweiss Group is one of India's leading and respectable financial services company. It provides broad spectrum of financial services and financial product to its huge base of clients. It services individuals, corporations and institutions. Edelweiss has a significant domestic presence and an impressive global foorprint. The main financial products offered by it are:

Credit Products

  • Wholesale credit and structured Collateralised credit (secure credit) to Corporates, Real Estate finance and Distressed Assets
  • Credit.Retail Credit which includes housing finance, loan against property, LAS, Small and Medium Enterprises and Agri Finance, and Rural Finance

Non-Credit Product

  • This includes investment in Capital Markets, Wealth Management, Asset Management and Agri Services and Life Insurance.
  • The Balance Sheet Management business manages the liquidity and Balance Sheet.

With its products like Life Insurance, Housing Finance, Mutual Fund and Retail Financial Markets, Edelweiss has maintained a strong presence in retail sector. As on financial year ended March’2016, Edelweiss had an asset base of over INR 32,000 Crores, total revenue of INR 5,316 Crore and resultant net profit of INR 414 Crore, which shows a solid operational foundation of Edelweiss. It has been performing consistently well even in cases of adverse economic indicators and has been registering a Compounded annual growth rate of 38% over past four years. It has a strong base of 887,000 clients that are catered by its 6277 employees. With 237 offices including nine overseas, in 122 cities across the world, Edelweiss has an extensive network that makes it conveniently accessible. They also have a robust network of 4500 sub-brokers and authorised persons who have contributed immensely to growth of Edelweiss.

Loan against Shares

Edelweiss offers a Loan against Shares under its credit umbrella. The shares have to be listed and approved by Edelweiss before any amount is raised by pledging them. This is done to protect itself from any sticky and highly volatile shares that can register a fall anytime. Investors who have existing investment portfolios can borrow funds by leveraging their portfolios. Loan against Shares is a wise way to raise funds by small and medium enterprises for their business purposes. This product also enables investors to borrow funds against existing investment portfolios in order to meet emergency requirements, investment needs and liquidity crunch. One must note here that most of the other lenders particularly the banks debar clients to raise this loan for investment. In some very limited cases, investment in IPO may be allowed at most. This product from Edelweiss has multiple variants to meet different types of needs of different clients. The amount of loan is determined based on the NAV of the portfolio being offered as security in this kind of loan.

Initial Public Offering (IPO) Finance

IPOs refers to the introduction of a company’s share in the primary market after it has just got listed or raising additional capital. Edelweiss allows loan against shares to apply in Primary Market Issues that include IPOs and FPOs. With this product, investors can apply for IPOs by investing only a margin amount which is specified separately for each IPO.

ESOP Funding

The Employee Stock ownership plan is a employee benefit that allows employees to own and invest in stocks of the company. It’s a way of making employees part owners so that they not only gain from the investment but also feel responsible for the company as they are in a way owners of the same. Edelweiss allows such employees to raise loan against such shares that have been allotted to the employee by its employers. The facility enables employees to exercise their ESOP options by providing a loan against ESOP Grants.

How to apply for Loan against Shares at Edelweiss:

You can apply for a loan in the following ways:

  • Apply online by visiting the company’s portal
  • Mail Edelweiss at home edelcap.com, upon which some executive from Edelweiss shall contact you
  • You can also place a direct call to their Mumbai office at +91 22 4342 8393

Repayment of Loan

Edelweiss provides flexible options for making repayments in form of EMIs. Clients can use any of the following three facilities to make such repayments:

  • Post Dated Cheques (PDCs)
  • Electronic Clearance System (ECS)
  • Deduction at Source

Advantages of Loan against Shares

The most notable advantages of loan against shares are as follows:

  • Utilisation based interest charge: Typically loan against shares is granted in form of a current account which can be overdrawn. The overdraft limit is set at the loan amount sanctioned. The advantage of this system is that a borrower is charged only for the amount utilised and not the entire limit.
  • Instant liquidity: Loan against shares takes shortest possible time for processing and can really come to the rescue if there is an emergency fund requirement.
  • Convenience: This loan is hassle free and can be used for varied purposes without any limitations except in some cases the loan agreement may debar from using this loan for investment purposes. So from personal finance to business, Loans against shares can be used for any purpose.
  • Benefits from the Shares: Even while the shares are pledged with the lender, all dividends, bonuses, or any other benefit accruing from shares rests with the borrower.

The only issue with Loans against share is that the limit of the overdraft or loan can vary drastically depending on the NAV of your portfolio. In most of the cases when the NAV erodes, the client has to make payment of the amount falling short within a very few days. So a comfortable liquidity is a must and you should be sure that you will be able to repay this loan in near future because Loan against shares are granted for a very short term of 6 months or maximum one year. If you are careful and diligent, this type of financing can really help you bridge temporary fund gaps while giving you flexibility and convenience.