How to Withdraw Funds from Your Loan Against Securities | ICICI Bank

A Loan Against Securities (LAS) is a smart way to get funds instantly when you need money for financial emergencies. This loan lets you pledge your securities and get money faster compared to other loan options. You can pledge your stocks, bonds, Mutual Funds or other securities as collateral with your bank and receive the loan amount in an Overdraft (OD) Account. To use these funds, you need to withdraw money from your OD Account as required.

Understanding Withdrawal Limits and Interest Rates of LAS

A Loan Against Securities (LAS) functions as an Overdraft (OD) facility, allowing you to withdraw funds as needed, up to the sanctioned limit. This limit is determined based on the current value of your pledged securities and may be periodically reviewed by the bank due to market fluctuations.

One of the key benefits of LAS is that interest is charged only on the amount you withdraw and not the entire sanctioned limit. The interest is calculated daily, ensuring you pay only for what you use.

 Step-by-Step Process to Withdraw Funds

Withdrawing funds from your ICICI Bank LAS (OD Account) is quick and easy. It can be done through cheque, iMobile or Internet Banking.

Check Your Drawing Power (DP):

Verify your available DP, which depends on the value of your pledged securities and the Loan-to-Value (LTV) ratio.

Withdrawal through Cheque:

Visit any ICICI Bank Branch and withdraw the amount from your LAS (OD Account) using a cheque. The cheque can be issued for self withdrawal or can be marked as ‘Account Payee’.

Withdrawal through Internet Banking / iMobile:

Log into Your LAS (OD Account) using Internet Banking or the iMobile app

Transfer funds from the OD Account using NEFT / IMPS.

Please note the following:

1. If the Loan-to-Value (LTV) ratio in the Account reaches the trigger limit, then either your securities will be sold by the Bank or your other Bank Account (given at the time of availing the Loan) will be debited or both may be done. Please ensure that the Account is not in an overdrawn status, i.e. you should not have withdrawn more funds than the allowed limit.
2. Always maintain the adequate margin relevant to your LAS and prevent your Account from being marked as ‘overdrawn’.
3. ICICI Bank has the right to sell your securities in the absence of timely interest payments or if your Account is in overdrawn status or both.

Best Practices When Withdrawing Funds

Here are some tips to remember when you are considering withdrawing funds from your LAS:

Plan Your Withdrawal Carefully

Before withdrawing funds, analyse your financial requirements and repayment ability. Since the interest is charged only on the amount used, withdrawing more funds than necessary can increase borrowing costs. It is better to plan withdrawals smartly so that you get enough liquidity while keeping interest expenses minimal.

Stay Within the Limits to Avoid Penalties

The next important factor to keep in mind is that the withdrawal should always stay within the approved Loan limit to prevent penalties or any added charges. The Bank determines your Drawing Power (DP) based on the value of your pledged securities. If the market value of these securities declines, your available Loan amount may be reduced. In such a case, the Bank may ask for additional collateral or partial repayment to maintain the required margin. Staying within limits helps you avoid unexpected financial pressure.

Monitor the Value of Your Securities Regularly

Since your Loan is backed by securities like stocks, bonds or Mutual Funds, market fluctuations can impact your borrowing power. If the value of your pledged securities drops, your Loan-to-Value (LTV) ratio may exceed the Bank’s limit, triggering a margin call. To avoid such situations, track your portfolio regularly and be prepared to pledge additional securities or make repayments if required. Being proactive ensures smooth fund access without disruptions.

Interest Calculation

The interest on LAS is charged only on the amount you withdraw, not on the total sanctioned Loan limit. This means you can reduce your interest costs by withdrawing only what you need. The Bank calculates interest daily and bills it monthly, so keeping your withdrawals minimal and repaying them quickly can help lower your overall borrowing costs. Before withdrawing funds, assess your financial needs and ensure that the borrowed amount aligns with your repayment capability.

Repayment Terms and Conditions

Always check the complete terms and conditions for fund withdrawal. It can include interest rates, repayment tenure and minimum monthly payments. ICICI Bank offers flexible repayment options, allowing you to pay only the interest each month while keeping the principal amount outstanding. Understanding these terms is crucial to avoiding late fees, penalties or a margin call in case of a drop in value of your pledged securities. Reviewing the Loan agreement and planning repayments accordingly can help you manage the Loan effectively and maintain financial stability.

Conclusion

The process to withdraw funds from a Loan Against Securities is simple with ICICI Bank. However, it is important to plan withdrawals carefully, taking into account interest rates and payback responsibilities. Staying informed about withdrawal limits, interest calculations and market volatility can help you manage your Loan more effectively. Making well-planned financial decisions allows you to maximise the benefits of your LAS while preserving financial stability and reducing excessive borrowing fees.

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