Pledged Securities: What SEBI’s 2025 Rules Mean for You

If you’ve ever found yourself in a cash crunch — with school fees due, or a medical emergency that couldn’t wait — you might’ve thought about selling your mutual funds or shares to manage the cost. But what if there was a way to access money without letting go of your investments?

That’s where pledging securities comes in. It’s a way to use your existing mutual funds or stocks to borrow money, often quickly and at better rates than credit cards or personal loans. But in the past, pledging wasn’t always a transparent process. You’d often be left wondering: Are my investments safe? Who can access them? Can I really track what’s happening?

Thankfully, the Securities and Exchange Board of India (SEBI) has stepped in again — this time with a new set of rules in 2025 designed to bring greater clarity, safety, and control to retail investors like us. Let’s understand how pledging works, what changed over the years, and what these new rules mean for you in practical terms.

What Does It Mean to Pledge Your Securities?

Pledging is a simple concept, but often misunderstood. It’s like keeping your gold jewellery at the bank to get a loan—you don’t sell it, but you temporarily hand it over as security. Similarly, when you pledge mutual funds or shares, you give a lender or broker the right to hold those investments as collateral while you borrow money against them.

So why do people in India do this? Mostly to access short-term liquidity without disturbing long-term financial goals. Maybe you’ve invested in SIPs to build a future education fund, or set aside shares for retirement. But life throws curveballs — an urgent home renovation, business expenses, or even something as routine as covering quarterly advance tax. Instead of breaking your investment journey, pledging gives you a smarter way to get cash while continuing to earn returns on your portfolio.

For example, if someone like Meena from Pune has ₹8 lakh invested in equity mutual funds, she can easily borrow ₹4–6 lakh (depending on the scheme’s eligibility) without redeeming a single unit. But historically, this process wasn’t always investor-friendly. Let’s talk about that.

Why SEBI Had to Step In: The Old Pledge System

Before 2020, pledging securities came with its fair share of risks — especially for retail investors who didn’t always know what they were signing up for. Many brokers operated on what’s known as a Power of Attorney (PoA) model. Essentially, when you pledged your holdings, you also gave your broker sweeping rights to move or even sell those assets. This lack of transparency was worrying. Investors had no real-time view of whether their assets were pledged or re-used by brokers for other purposes. And in some cases, it led to misuse or unauthorized transactions.

Recognizing these gaps, SEBI rolled out the Margin Pledge and Repledge (MPR) system in 2020. This framework ensured that securities remained in the investor’s demat account while being marked as “pledged”, and allowed a more controlled flow of collateral between client, broker, and clearing corporation. It was a major shift in the right direction. But the evolution didn’t stop there. As markets and technology evolved, so did the expectations of retail investors. And that’s where the 2025 updates come in.

SEBI’s 2025 Update: What’s New This Time?

In June 2025, SEBI issued a fresh set of guidelines to make the pledging system even more transparent and user-controlled. These rules aim to tighten reporting norms, ensure same-day reversals, and give you — yes, you — the visibility you deserve as the rightful owner of your investments.

Here’s what’s changed:

• Brokers must now share ISIN-level details of all pledged securities with investors daily. No more guessing games.
• You’ll receive real-time SMS and email alerts every time your securities are pledged, unpledged, or repledged.
• SEBI has mandated uniform margin reporting across all stock exchanges, creating consistency.
• Most importantly, once you repay your loan or your margin is released, the securities will be unpledged the same day (T+0 basis).

These updates may seem technical, but they’re actually a big win for everyday investors. They minimise the chances of fraud, reduce operational lags, and increase your confidence in using pledging as a legitimate financing tool.

And if you’re considering a loan against mutual funds, platforms like Quicklend are already aligned with SEBI’s guidelines — giving you a fully digital, secure, and transparent journey from start to finish. 

Stay with us, because in the next section, we’ll break down exactly how these changes affect you as a retail investor in 2025.

How Do These Changes Affect You as an Investor?

If you’ve ever worried about not knowing where your pledged assets were or how long it would take to get them back, SEBI’s 2025 reforms should ease your mind. These changes offer practical benefits that go beyond compliance — they affect how you plan, borrow, and protect your investments. For one, daily ISIN-level reporting gives you visibility like never before.

You’ll know which mutual fund scheme or stock is pledged, when it was pledged, and how much is tied up. This clarity helps you plan better — whether you’re topping up a loan, planning an early closure, or rebalancing your portfolio. Real-time alerts ensure that nothing happens without your knowledge. No more calling your broker to check statuses or waiting for end-of-day statements. You’ll be notified the moment a pledge is created or released.

And then there’s the T+0 settlement: your securities are returned to your demat account on the same day the loan is closed. This is particularly helpful if you want to switch schemes or redeem units immediately after. In short, these new rules give you control. You don’t have to “hope” that your securities are safe — you’ll “know.”

What You Should Keep in Mind Before Pledging in 2025

If you’re planning to pledge mutual funds or stocks in 2025, it’s a good time to be cautious and informed.

Start by making sure your broker or platform provides ISIN-wise pledge details and supports SEBI’s new framework. Don’t hesitate to ask questions like: “Will I get daily reports?”, “Are pledge requests confirmed via SMS or email?”, and “How soon can I access my assets after repayment?”

It’s also wise to track your margin and loan status regularly. Treat it like you would any financial responsibility — missed alerts or delayed reversals can cost you more than just money. Lastly, go with a lender who makes things simple. At Quicklend, we’ve built our loan journey to be fully digital, with zero paperwork and real-time status tracking. r 

Final Thoughts

SEBI’s 2025 reforms around pledged securities are a welcome move. They bring more power back to the investor — you get better visibility, quicker settlements, and stronger safeguards around your assets. If you’re thinking of using your mutual funds to raise funds — whether for personal reasons or margin requirements — this is the right time to explore your options. And as always, don’t just look at the interest rate; look at how transparent and responsive your lending partner is.

This is general guidance. For personalized loan advice, contact our team at Quicklend.