The Adani Group have recently prepaid loans backed by shares worth $902 million or 7,374 crores to foreign banks and Indian lenders ahead of their maturity in April 2025.


About ‘Securities-based lending’

  • It is the practice of raising a loan by offering your existing investments in stocks/mutual funds/ Exchange-traded funds (ETFs) as collaterals.
  • These kinds of loans are generally offered to high-net-worth individuals by large financial institutions and private banks.
  • The loan amount depends on the security the borrower is offering.
  • The loan can then be used for making purchases like real estate or personal items.
  • This loan cannot be used for making further security purchases.
  • Due to the inherent volatility in the nature of stocks/mutual funds, the risk of forced liquidation tends to be very high for these loans.
  • Borrowers benefit from easy access to capital, lower interest rates, and greater repayment flexibility and also avoid having to sell their securities.