Loans against Shares should only be taken when you are expecting a certain sum of money in a few months and you need some funds for short term. The loan is available in the form of an overdraft facility against the pledge of financial securities like shares and bonds.
The loan amount that can be sanctioned depends upon two factors, and they are the extent of funding on a particular stock and the price considered by the lender for calculating the value of shares.
Generally, demat shares get you a larger loan amount in faster time, at less rate of interest and at smaller processing fee. The Reserve Bank of India allows banks to lend up to 75 percent of the value of demat shares and 50 percent of the value of the physical shares.