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Loan Against Mutual Funds

Facility to access funds using existing mutual fund holdings as collateral

Loan Against Mutual Fund is a structure where mutual fund units are marked as lien with a lender to enable access to funds. The ownership of the units remains with the investor, while the units are held as security during the loan period.

The process involves selecting eligible mutual fund schemes, placing a lien through approved platforms, and receiving a sanctioned credit limit based on the value of units. This structure is commonly integrated within the workflows of Mutual Fund Distributors for client servicing and record tracking.

In the distributor and investor ecosystem, this service is used for liquidity access without redeeming mutual fund units. It connects the investor's portfolio with lending institutions through a defined and trackable process.

Types of Loan Against Mutual Fund

Overdraft Facility

A running credit limit is provided where funds can be withdrawn as needed within approved limits.

Term Loan Structure

A fixed loan amount is disbursed for a defined duration with a structured repayment schedule.

Digital Lien-Based Loan

The lien marking and loan processing are completed through online platforms without physical documentation.

Equity Scheme-Based Loan

Loan is extended against equity mutual fund units, subject to lender-specific eligibility conditions.

Debt Scheme-Based Loan

Loan is provided against debt mutual fund units, generally following a defined margin requirement.

Features

• The process allows mutual fund units to remain in the investor's account while marked as lien.
• Loan requests and lien marking can be completed through digital platforms with minimal manual steps.
• Access to funds is linked to the current valuation of the pledged mutual fund units.
• Transaction records and lien status are available for review through system-based tracking tools.
• The structure connects mutual fund folios with lender systems through a defined integration process.

Benefits

• The structure provides a way to access funds without initiating redemption of mutual fund holdings.
• The process is designed with clear steps that can be tracked by both distributors and investors.
• Digital platforms enable visibility of lien status, loan usage, and related transaction records.
• The overall flow supports documentation, verification, and execution through a structured system.
• The service aligns with distributor workflows for maintaining records and coordinating with lenders.

This structure forms part of a broader financial servicing framework where mutual fund holdings are linked with lending processes. It is designed to maintain transparency in lien marking, documentation, and tracking.

The service operates through defined steps involving investors, distributors, and lending institutions with system-based visibility.

For more information, refer to the detailed process documentation available on the platform.

Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Loan Against Mutual Fund is subject to lender terms and conditions, including eligibility, margin requirements, and applicable charges. Mutual Fund Distributors are not authorized to provide any assurance or guarantee related to loan approval or terms. Investors are advised to review all documentation provided by the lending institution before proceeding.