Loan Against Shares: New 60% LTV Cap From April 2026

Since 1 April 2026, a bank can lend you no more than 60% of the value of the listed shares you pledge. This is the loan-to-value (LTV) ceiling set by the Reserve Bank of India (Commercial Banks - Credit Facilities) Amendment Directions, 2026. If your shares are worth ₹10 lakh, your maximum loan against them is ₹6 lakh. The rule is now in force.

Short on time? Jump to what to do in the next 30 minutes if you think your lender has breached the cap.

The RBI notified these directions on 13 February 2026 (RBI/2025-26/211, DOR.CRE.REC.402/07-01-001/2025-26). They took effect on 1 April 2026 and apply to commercial banks.

Two numbers matter for ordinary investors:

1. 60% LTV on listed shares and listed convertible debt securities. A bank cannot finance more than 60% of their market value. You fund the rest.
2. A ₹1 crore ceiling per individual on the total loan a bank can grant against eligible securities. A separate sub-limit of ₹25 lakh applies to a loan taken to buy securities in the secondary market.

There is also a related provision for company acquisitions: total bank financing for an acquisition cannot exceed 75% of the acquisition value, and the acquirer must put in the rest from its own funds. That part is for corporate borrowers, not retail investors.

LTV is the share of an asset's value a lender will finance. A 60% LTV means the bank lends 60 and you carry 40 as your own buffer.

Say your demat holding is worth ₹10 lakh. The most a bank can now sanction against it is ₹6 lakh. Before the cap, some lenders stretched higher, leaving thin cushions. A thin cushion is dangerous, because share prices move fast.

The remaining 40% is not a fee. It is the safety margin that absorbs a fall in the share price before the bank's loan is at risk.

This rule hits retail investors who pledge shares to raise cash without selling them. People use a loan against securities to fund a medical bill, a business gap, a property down payment or a tax payment, while keeping their portfolio intact.

If you have an existing overdraft or loan against shares, your new drawdowns and renewals must respect the 60% cap. Check your sanction letter and your current drawing power against today's market value.

A margin call is the moment a lender demands you top up cash or pledge more shares because the value of your pledged shares has fallen. If you cannot top up, the bank can sell your shares to recover its money, often at the worst possible price.

The 60% cap builds a thicker buffer before that moment arrives. With a 40% cushion, the market has to fall a long way before your loan is underwater. A higher LTV gives a smaller cushion and triggers margin calls sooner.

In short: a lower LTV means fewer forced-sale surprises. You keep more control over when, and whether, your shares are sold.

This matters most in a volatile market. A 20% single-day drop in a stock can wipe out a thin margin overnight. The new cap is the RBI's way of keeping that risk inside safer limits.

If a bank sanctions or maintains a loan above 60% LTV on your listed shares, raise it in writing and escalate. Follow these steps.

1. Step 1 - Ask the bank in writing. Email the branch and the nodal officer. Quote the RBI (Commercial Banks - Credit Facilities) Amendment Directions, 2026 and the 60% LTV ceiling. Ask them to confirm your drawing power in writing.
2. Step 2 - File a complaint with the bank. Use the bank's grievance portal. Note the complaint number and the date. Give the bank 30 days to resolve it.
3. Step 3 - Escalate to the RBI Ombudsman. If the bank does not resolve it in 30 days, or rejects it, complain free of cost on the RBI complaint portal at https://cms.rbi.org.in under the Reserve Bank Integrated Ombudsman Scheme, 2021. Attach your sanction letter, your emails and the complaint number.
4. Step 4 - If it is a public-sector bank, use RTI. Public-sector banks are public authorities under the RTI Act, 2005. You can file a Section 6 application asking for the bank's internal circular adopting the 2026 directions and the calculation of your drawing power. Draft it with the AI RTI Drafter. Note: private banks are not public authorities, so RTI does not lie against them - use the Ombudsman route instead.

For the wider playbook on disputing lender practices, see loan prepayment and foreclosure charge disputes.

• Open your latest loan-against-shares sanction letter and find the stated LTV or drawing power.
• Pull the current market value of your pledged shares from your demat statement.
• Divide your sanctioned loan by that value. If it is above 60%, you have a case.
• Email the branch and nodal officer asking for written confirmation of your drawing power.
• Save screenshots of values and dates - they are your evidence if you escalate.

• Reserve Bank of India (Commercial Banks - Credit Facilities) Amendment Directions, 2026, RBI/2025-26/211, DOR.CRE.REC.402/07-01-001/2025-26, dated 13 February 2026: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13297&Mode=0
• RBI Complaint Management System (Integrated Ombudsman Scheme, 2021): https://cms.rbi.org.in
• The Right to Information Act, 2005: https://righttoinformation.wiki/act

From 1 April 2026, a commercial bank can lend at most 60% of the market value of the listed shares or listed convertible debt securities you pledge. This is set by the RBI (Commercial Banks - Credit Facilities) Amendment Directions, 2026. If your shares are worth ₹10 lakh, your loan is capped at ₹6 lakh. You fund the remaining 40% yourself as a safety margin.

Yes, in practice. The directions are in force from 1 April 2026. New sanctions must respect the 60% ceiling, and renewals and fresh drawdowns on existing facilities should be brought in line. Check your sanction letter against the current value of your pledged shares. If your loan is above 60% of that value, ask your bank in writing how it is applying the new cap.

Yes. The directions cap the total loan a bank can grant to an individual against eligible securities at ₹1 crore per individual. A separate sub-limit of ₹25 lakh applies to a loan taken to acquire securities in the secondary market. These ceilings sit on top of the 60% LTV rule, so both limits apply together.

A margin call happens when your pledged shares fall in value and the bank demands more cash or shares, or sells your holding. A 60% LTV leaves a 40% cushion, so the market has to fall much further before your loan is at risk. A higher LTV leaves a thinner cushion and triggers margin calls and forced sales sooner. The cap reduces the chance of a forced sale at a bad price.

Only against a public-sector bank. Public-sector banks are public authorities under the Right to Information Act, 2005, so you can file a Section 6 application for their adoption circular and your drawing-power calculation. Private banks are not public authorities, so RTI does not apply to them. For a private bank, complain to the bank first, then to the RBI Ombudsman at https://cms.rbi.org.in.

No. These directions are part of the RBI Commercial Banks - Credit Facilities framework and apply to commercial banks. Non-banking financial companies follow their own RBI directions on loans against securities, which can set different LTV limits. If you borrow from an NBFC, check that lender's specific terms and the RBI directions that govern NBFCs.

• Dispute loan prepayment and foreclosure charges
• Draft your RTI application with the AI RTI Drafter
• Read the Right to Information Act, 2005
• The RTI Playbook