Loan Against Mutual Fund: Unlock the Value of Your Mutual Fund Portfolio
Get quick access to funds by leveraging your mutual fund portfolio while your investments remain intact.
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Loan Against Mutual Fund: Access Funds While Your Investments Grow
Unexpected expenses don't always have to disrupt your investment journey. Get a Loan Against Mutual Fund with Shriram Financial Services and unlock liquidity without touching your investments. Pledge eligible mutual fund units as collateral, apply online and get your funds, while your investments remain invested. Shriram Financial Services provides a fast, transparent, and fully digital LAMF experience with a simple online application process.
How does LAMF Work?
Here is a step-by-step breakdown of how your mutual fund portfolio provides you access to quick funds:
Check Eligibility
Check your eligibility, credit limit, and interest rates
Select Units
Select mutual fund units to pledge
Complete KYC
Complete your KYC verification
Pledge Units
Pledge your selected mutual fund units
Loan Approved
Your loan amount is approved, and a Sanction Letter with Key Fact Statement (KFS) is issued
e-Sign Agreement
e-Sign the loan agreement
Account Ready
Your loan account is ready to use
Withdraw Funds
Withdraw funds as needed
Repay & Regain Control
Repay the loan at your convenience and regain complete control of your mutual fund holdings
Interest Rates for Loan Against Mutual Fund
One of the most compelling reasons to choose LAMF over a personal loan or credit card rollover is the significant interest rate advantage of LAMF. Because your mutual fund portfolio backs the loan as collateral, lenders price the risk lower, and you benefit directly from that reduced risk premium.
Our LAMF interest rates are structured transparently, with rates calibrated against the loan slab and the type of mutual fund pledged. The interest rates starts from 10.5% p.a., which is applicable for the loan slab of ₹10,000 to 2 Crores.
What Determines Your LAMF Interest Rate?
- Type of mutual fund pledged (equity or debt)
- Loan-to-Value (LTV) ratio selected
- Total loan amount and overdraft utilisation
- Market lending benchmarks
- Borrower's credit profile
Note: Rates are indicative and subject to periodic revision. All rates are annualised at monthly rests. Interest is levied only on the drawn overdraft amount and not on the full sanctioned limit. Actual rate offered may vary based on various factors.
LAMF Eligibility Criteria
Our Loan Against Mutual Fund is designed for Indian investors. If you hold eligible mutual fund units and meet the following criteria, you can apply:
Eligibility Parameter
Requirement
Residential Status
Resident Indian (Individual)
Applicant Type
Salaried Individual
Age
18 years to 70 years.
KYC Compliance
Valid KYC is mandatory. PAN is compulsory for portfolio fetching.
Minimum Portfolio Value
Mutual fund holdings must meet our minimum eligible threshold.
Fund Eligibility
Only schemes on our approved fund list qualify. ELSS and close-ended funds, and any fund which has underlying assets such as Gold/Silver, are not eligible.
Documents Required for Loan Against Mutual Fund
Our Loan Against Mutual Fund facility is built for a fast and paperless experience. Mutual Funds' portfolios are fetched directly from CAMS and KFintech using your PAN. You only need to keep the following essentials handy:
Documents
Details
PAN Card
Mandatory - used for KYC verification and portfolio fetching from CAMS / KFintech
Aadhaar Card
For identity and address verification
Bank Account Proof
Cancelled cheque, bank passbook, or net banking statement for disbursal account verification
Mutual Fund Folio Details
Auto-fetched via PAN - no physical statement required in most cases
What is the Loan-to-Value Ratio and How Much Can You Borrow?
The Loan-to-Value (LTV) Ratio indicates the maximum percentage of your eligible mutual fund portfolio that can be availed as a loan. The sanctioned amount depends on the type of mutual fund, the current market value of your investments, lender policies, and internal risk assessment.
Mutual Fund Category
Max LTV Ratio
Illustration (₹10L portfolio)
Equity Mutual Funds
Up to 50%
Borrow up to ₹5 Lakh
Debt Mutual Funds
Up to 70%
Borrow up to ₹8 Lakh
Why is the LTV Different for Equity and Debt Funds?
Equity mutual funds are subject to higher market volatility, and their NAV can swing significantly based on stock market movements. To protect both the borrower and the lender from a sudden drop in collateral value triggering a forced margin call, lenders apply a more conservative LTV cap on equity funds.
Debt mutual funds invest in fixed-income instruments like government bonds and corporate paper. Their NAV is relatively stable, which allows lenders to extend a higher LTV without disproportionate collateral risk.
Mutual Funds Eligible for LAMF
Most investors can avail a Loan Against Mutual Fund using a wide range of eligible schemes. The final list of accepted mutual funds depends on the lender's approved universe and prevailing lending policies. We accept pledges against a vetted list of approved schemes registered with CAMS and KFintech across the following fund categories:
Fund Category
Eligible?
LTV Applied
Equity Mutual Funds (open-ended only)
Eligible
50%
Debt Mutual Funds
Eligible
70%
ELSS - post 3-year lock-in
Eligible (partial – only free units)
50%
Index Funds (equity)
Eligible
50%
Fund of Funds (FoFs)
Eligible
70%
Fixed Maturity Plans (FMP)
Not Eligible
N/A
Closed-Ended MF Schemes
Not Eligible
N/A
ELSS - within 3-year lock-in
Not Eligible
N/A
Gold ETFs & Silver ETFs
Not Eligible
N/A
Gold Savings Funds/Silver Fund of Funds
Not Eligible
N/A
How are Fund Eligibilities Determined?
Eligible funds are those listed on Shriram Financial Services' approved scheme list, which is reviewed and updated periodically in line with AMC updates, market liquidity assessments, and RBI directives. Portfolio details are auto-fetched via CAMS and KFintech using your PAN - you simply select the units you want to pledge from your live portfolio on screen.
If you are unsure whether your investments qualify, simply apply online, and our team will help you verify the eligibility of your mutual fund portfolio.
What are the Benefits of Loan Against Mutual Fund?
Here are the benefits of Loan Against Mutual Fund and why discerning investors consistently opt for LAMF when they need liquidity:
Competitive Interest Rates
Since LAMF is a secured loan backed by your mutual fund investments, it generally offers lower interest rates than unsecured loans such as personal loans or credit cards.
Your Portfolio Keeps Compounding
Pledging does not mean pausing your wealth journey. Pledged mutual fund units remain invested and active. NAV appreciation, dividend payouts, and bonus units continue accruing to your account throughout the loan tenure.
Access Funds Quickly
With a streamlined digital application process and minimal documentation, eligible applicants can receive faster approvals and disbursements than many conventional borrowing options.
Pay for Only What You Use
LAMF is offered as an overdraft facility, allowing you to withdraw funds from your sanctioned limit whenever needed. Interest is charged only on the amount you utilise, not on the entire sanctioned limit.
No Need to Liquidate Investments
Avoid redeeming your mutual fund units and the potential impact on your long-term wealth creation goals.
Zero Capital Gains Tax
Redeeming mutual funds triggers Capital Gains tax depending on the holding period and fund type. With LAMF, no units are sold. No tax event is created.
Simple Digital Process
From application and approval to loan disbursal, the journey is designed to be fast, secure, and paperless.
Suitable for Multiple Financial Needs
Use the loan amount for medical emergencies, education expenses, home renovation, travel, or other personal financial needs, subject to the lender's terms.
LAMF, Personal Loan, and Selling Mutual Funds – A Comparison
When a financial need arises, customers typically have three options:- take a personal loan, redeem their mutual funds, or use Loan Against Mutual Fund. The differences across these three options are stark, and understanding them can save you a significant amount of money, time, and long-term wealth.
Comparison Parameter
Shriram Financial Services' LAMF
Personal Loan
Selling Mutual Funds
Investment Continuity
Fully maintained - units stay invested
No investment disruption
Investment permanently liquidated
Interest Rate
Lower - secured facility starts from 10.5%*p.a.
Higher - unsecured (12%–24% p.a.)
Not applicable
Capital Gains Tax
Not triggered - no redemption
Not applicable
STCG/LTCG applicable at redemption
Approval Basis
Portfolio value & eligibility
Income, credit score, employment
No approval needed
Processing Time
Fast & 100% digital
2–5 business days typically
T+2 or T+3 days for credit
End-Use Restriction
None
None
None
Impact on Financial Goals
None - goals remain on track
None
Long-term compounding disrupted
Prepayment Charges
Nil after the first 3 months
Often applicable
Not applicable
Documentation
Minimal - PAN-based digital process
High - income, employment, and other proofs
Minimal - KYC only
The Verdict
If you hold a mutual fund portfolio and require short-to-medium-term liquidity, LAMF is almost always the most financially sound choice. It preserves your wealth compounding, avoids a tax event, costs less in interest, and is faster to access than most traditional loan products.
Our LAMF is specifically designed to make this smart choice accessible, affordable, and fast for Indian investors at every portfolio size.
When to Choose Loan Against Mutual Fund?
The flexibility offered by Loan Against Mutual Fund makes it the right financial tool across a wide range of real-life situations. Here are a few common scenarios where investors choose LAMF over personal loans or fund redemption:
Medical Emergency
Healthcare costs don't follow a schedule. LAMF delivers fast liquidity without dismantling an investment portfolio you may have built over years, ensuring you meet the medical need without a long-term financial setback.
Education Fees
University admissions, overseas programme deposits, and semester fees often come with rigid deadlines. LAMF provides access to funds so no educational opportunity is missed, while your investments continue to work toward future goals.
Home Renovation or Down Payment
Whether you are remodelling your home or arranging a down payment for a property purchase, LAMF gives you a cost-effective credit line that is faster and cheaper than a personal loan or top-up home loan.
Wedding or Milestone Event
Life's big moments should not be funded by breaking long-term investments. You can utilise LAMF to manage wedding expenses or other family celebrations and repay without disrupting wealth creation.
Travel or International Expenses
Visa deposits, foreign currency needs, or international trip costs are handled smoothly via LAMF, without selling units at an inopportune market moment.
Risks to Consider Before Applying for LAMF
While a Loan Against Mutual Fund offers several advantages, it is important to understand the associated risks and responsibilities before applying.
Market Volatility
A decline in the value of your mutual fund investments may reduce the available collateral value.
Margin Calls
If your portfolio value falls below the required Loan-to-Value (LTV) threshold, you will be asked to pledge additional units or partially repay the outstanding loan.
Forced Redemption in Extreme Cases
Your pledged units may be partially redeemed to recover outstanding dues if an LTV breach goes uncured - a protective last resort, not a routine action. Hence, plan your repayments with market volatility in mind.
Restricted Transactions
Mutual fund units under lien cannot be redeemed, switched, or transferred until the outstanding loan amount is repaid and the lien is removed.
Pre-Closure Within 3 Months Attracts a Charge
Repaying your entire LAMF within 3 months of the first withdrawal attracts a pre-closure charge of 3% on the total outstanding loan amount. No penalty applies after 3 months.
Floating Interest Rates
Interest rates may change during the loan tenure based on market conditions or our applicable benchmark.
Repayment Discipline
Timely repayment helps maintain your loan account and prevents additional charges or enforcement of security, where applicable.
Loan Against Mutual Fund: Access Funds While Your Investments Grow
Pledge eligible mutual fund units as collateral, apply online and get your funds, while your investments remain invested.
Got Questions?
View All FAQsA Loan Against Mutual Fund is a secured credit facility where you pledge your mutual fund units as collateral with a lender, without redeeming them. The lender marks a lien on these units via CAMS or KFintech and grants you a loan or overdraft limit based on the current NAV of your portfolio. Your units remain invested and keep earning returns throughout the loan tenure.
If you already own eligible mutual fund investments, a Loan Against Mutual Fund offers advantages such as competitive interest rates, continued investment ownership, and flexible repayment options compared to many unsecured personal loans.
Yes. We offer an easy digital application journey, allowing eligible customers to apply online, complete verification, pledge mutual fund units, and receive funds with zero paperwork.
Yes. Lien marking does not affect the economic returns of your investments. NAV appreciation, dividends, and bonus units continue to accrue to your folio while the lien is active. What changes is your ability to redeem or transfer those units; this is restored once the loan is repaid and the lien is released.
Need A Clearer Direction?
Let's get in touch on a 15-minute call where we can answer any questions you may have. Our advisor will help you weigh a pledge against redeeming and show what a dedicated, research-led plan would do differently.