In today's fast-paced financial landscape, accessing quick liquidity without disturbing your long-term investments is a big advantage. A Loan Against Mutual Funds (LAMF) gives you that flexibility. Instead of redeeming your mutual fund units, you can pledge them and raise funds almost instantly through a seamless digital process.
📌 What is a Loan Against Mutual Funds?
A Loan Against Mutual Funds is a secured loan offered by banks and NBFCs where you pledge your mutual fund units as collateral to borrow money. The lender places a lien on your units, and you continue to hold ownership and earn potential returns while accessing funds.
🔑 Key Highlights
- Loan amount: ₹10,000 to ₹5 crore+
- Eligible MF types: Equity, Debt, Hybrid (depending on lender)
- Loan-to-Value (LTV): 50–70% of fund value
- Tenure: Up to 36 months
- Interest rate: 9% – 12% p.a. (approx.)
⚙️ How Does the Digital Process Work?
Today, leading platforms like Groww, Zerodha, Paytm Money, and traditional banks like HDFC and ICICI offer a fully digital loan application process, often with same-day disbursal.
💻 Digital Loan Journey:
- Log in to your broker or lender's platform (like Zerodha Console or Groww app)
- Select mutual funds you want to pledge
- Submit basic details – PAN, Aadhaar, bank account, etc.
- eSign the agreement via Aadhaar-based OTP
- Lien is marked digitally with CAMS/KFintech
- Loan is disbursed to your bank account – often within minutes to a few hours
- ✅ No branch visits
- ✅ No physical documents
- ✅ No need to sell your funds
📝 Eligibility & Documents
✅ Who Can Apply?
- Salaried professionals
- Self-employed individuals
- HUFs, Companies, Trusts (in select cases)
📄 Required Documents:
- PAN & Aadhaar
- Mutual Fund folio details
- Bank account details
- KYC must be up to date
💡 Why Choose Loan Against Mutual Funds?
✅ No Need to Sell Investments
You stay invested and continue to benefit from market growth, dividends, and compounding.
✅ Lower Interest Rates
LAMFs offer rates starting at 9% p.a., much cheaper than unsecured loans or credit card debt.
✅ Instant Disbursal
With e-lien and digital KYC, funds are often transferred within hours — comparable to personal loans.
✅ Flexible Repayment
Choose between:
- Term Loan (fixed EMIs)
- Overdraft Facility (pay interest only on the used amount)
- Bullet Repayment (single payment at the end)
🔄 LAMF vs Instant Personal Loan – A Comparison
| Feature | Loan Against MF | Instant Personal Loan |
|---|---|---|
| Collateral | Mutual Fund units | Unsecured |
| Interest Rate | 9% – 12% p.a. | 10% – 24% p.a. |
| Processing Time | Few minutes to hours | Instant (via fintech apps) |
| Documentation | Minimal, digital | Minimal, digital |
| Loan Amount | Depends on MF value | Depends on income/credit |
| Impact on Investment | None | N/A |
Verdict: If you already have mutual fund investments, a LAMF is not only cheaper, but also offers better financial efficiency than a personal loan.
🏦 Popular Banks and Platforms Offering LAMF
- HDFC Bank
- ICICI Bank
- Axis Bank
- State Bank of India (SBI)
- Financial Health
These institutions offer a 100% online experience and fast disbursal.
🤔 When Should You Consider a Loan Against Mutual Funds?
- Sudden medical expenses
- Short-term business capital
- Down payment for home/vehicle
- Avoid breaking long-term investments
🔚 Conclusion
A Loan Against Mutual Funds is an efficient, low-cost solution for short-term liquidity. With modern digital platforms enabling instant loans against your investments, it's now faster and simpler than ever. If you're looking for an alternative to high-interest personal loans, LAMF might be the smarter route.
👉 [Apply Instantly Online]
Frequently Asked Questions
What is the maximum loan I can get against mutual funds?
Most lenders offer up to ₹5 crore depending on your portfolio size. The actual amount depends on the type and value of mutual funds pledged.
Are both equity and debt funds eligible?
Yes, both are eligible. However, equity funds typically have a lower Loan-to-Value (LTV) ratio than debt funds due to market volatility.
Will I continue to earn returns on my mutual funds?
Yes. Even when pledged, your mutual fund units continue to earn returns and dividends (if any).
Can I prepay the loan early?
Yes, lenders on our platform allow partial or full prepayment without penalties.
Is the digital loan process safe?
Yes, major lenders use secure platforms and OTP-based authentication. Your units are only placed under lien, not sold.
What happens if I default on the loan?
If you fail to repay, the lender can redeem the pledged mutual fund units to recover the outstanding amount.