Loan Against Mutual Fund, Your Future Still in View
Borrow against your mutual funds for what you need today, while every unit stays invested for tomorrow.
What Is a Loan Against Mutual Fund?
A Loan Against Mutual Fund is a secured credit facility that lets you borrow against your existing mutual fund portfolio. By pledging eligible mutual fund units, you can access funds quickly while your investments remain active and continue to grow.
Note: One cannot redeem or sell the pledged units until the loan is fully repaid.
Why does LAMF matter?
Many investors unknowingly compromise long-term wealth when they sell mutual funds for immediate needs, which costs you in three ways:
- You invite unnecessary Capital Gains Tax (Short-Term or Long-Term Capital Gains Tax)
- You lose compounding of wealth - potentially years of growth,
- You disrupt your SIP discipline and long-term wealth creation
With a Loan Against Mutual Fund, none of that happens.
How to Apply for a Loan Against Mutual Fund?
Getting a Loan Against Mutual Fund for personal needs with Shriram Credit is a paperless process that ensures minimal turnaround time. Here is exactly how it works, from checking eligibility to getting the funds credited to your bank account.
How to Apply for a Loan Against Mutual Fund?
Getting a Loan Against Mutual Fund for personal needs with Shriram Credit is a paperless process that ensures minimal turnaround time. Here is exactly how it works, from checking eligibility to getting the funds credited to your bank account.
- Step 1
Check and Select
Check your eligibility, credit limit, and interest rates. Choose/select your mutual fund units to pledge, and complete the KYC verification.
- Step 2
Pledge
Pick the units and complete your KYC. Lien-marking is done online, demat or not.
- Step 3
Withdraw
Your loan account is ready to use and you can withdraw funds as needed.
- Step 4
Repay and Release
Repay the loan at your convenience (as per SCCL’s terms and conditions) and regain complete control of your mutual fund holdings.
Shriram Credit Advantage: Our digital lien-marking process supports non-demat/physical (CAMS/KFintech folio) mutual fund units, a feature that many Regulated Entities/NBFC-only platforms lack.
Benefits of Loan Against Mutual Fund
Lower Interest Than Personal Loans
From 9.5%* p.a. versus 12–24% for personal loans.
Stay Invested to Grow Your Wealth
Units keep earning returns even after pledging.
SIPs Continue
Your ongoing SIPs run without disruption.Run without any disruptions
No Pre-Closure Charge
Repay part or all of it whenever you like, at no charge.
No Capital Gains Tax
Nothing is redeemed, so no STCG/LTCG.
No Income Proof
No salary slips or income proof needed.
Loan Against Mutual Fund (LAMF) Calculator
Up to 45% of the value of your equity funds and 75% of your debt funds, with interest only on what you withdraw.
What I Hold
Want to Borrow
| Interest Only | |
|---|---|
| Each Month | ₹6,563 |
| Total Interest | ₹2,36,250 |
| Total Repaid | ₹9,86,250 |
Who Can Apply for a LAMF With Shriram Credit?
Any investor holding eligible mutual fund units who meets the basic requirements shared below may apply immediately. Shriram Credit's LAMF eligibility depends on your mutual fund portfolio and the fund category. Here is the complete eligibility framework:
Eligibility Criteria
- Resident Indian
- Open to individuals who live in India
- Aged 18 to 70
- Your age on the day you apply
- Individuals (Salaried and Self-Employed)
- Lent to individuals only, whatever your line of work
- KYC-Compliant (Aadhaar and PAN)
- Completed online through Aadhaar e-KYC and your PAN
- Loan Amount ₹10,000 to ₹2 Crore
- Your limit follows the value of the units you pledge
- Mutual Fund Portfolio
- Mutual fund units must be in the borrower’s single name
- No Minimum Credit Score; New to Credit Welcome
- Your units secure the loan, so no credit history is needed
Documents Required
- Identity Proof
- PAN Card
- PAN Card
- Mandatory
- Address Proof
- Aadhaar
- Bank Details
- Bank Account Number and IFSC
- Mutual Fund Details
- AMC name, scheme name, available units, auto-fetched via RTA during the journey
- Photograph
- Will be captured during the KYC process
What Are the Interest Rates for LAMF?
Rates from 9.5%* p.a., lower than most unsecured loans (up to 20%+), with transparent pricing and no hidden charges.
Interest
From 9.5%* p.a.
Charged on what you withdraw, not on the whole limit.
What Affects Your Interest Rate
Fund type (equity, debt or hybrid), LTV ratio, loan amount and market conditions. Your credit score is not one of them.
- Processing Fee
- From ₹999 + GST
- 1% of the limit or ₹999 + GST, whichever is higher, up to a ₹10,00,000 limit; by slab above that
- Tenure
- 12 Months
- Interest monthly; the principal by the end, or sooner
- Bounce Charges
- ₹100 + GST
- Each time an interest payment bounces
- Closure Charges
- Zero
- No pre-closure or foreclosure charge, whenever you close
When to Use Loan Against Mutual Fund?
Loan Against Mutual Fund (LAMF) is a versatile financial product suited for a wide range of personal needs. Here are the most common situations where investors turn to Shriram Credit's LAMF:
| Use Case | Problem Faced | How LAMF Helps |
|---|---|---|
| Medical Emergencies | Problem FacedSudden medical bills that insurance may not cover, and selling means a loss. | How LAMF HelpsInstant Emergency Liquidity: Money comes quickly, and no unit is sold low, so the rest keeps compounding. |
| Education Fees | Problem FacedSchool, college or overseas fees fall due on a fixed date, and they are large. | How LAMF HelpsShort-Term Bridge Funding: The fee is paid on time, and the fund meant for your child stays invested. |
| Home Renovation | Problem FacedA move or renovation needs money now, before the old property is sold. | How LAMF HelpsHigh-Value Bridge Loan: Withdraw up to ₹2 crore online, and close it at no charge once you sell. |
| Weddings and Milestone Events | Problem FacedA wedding or milestone brings large vendor payments, each on its own date. | How LAMF HelpsPhased Vendor Payouts: Withdraw from your limit as each payment falls due, paying interest only on that. |
| Debt Consolidation | Problem FacedCard dues and personal loans run at 12% to 24% a year, and keep growing. | How LAMF HelpsInterest Saver Strategy: Borrow from 9.5% a year against your units and clear the costlier debt. |
How to Choose between LAMF, Personal Loan, and MF Selling?
Say, you invested ₹10 Lakh Three Years Ago, worth ₹16L today. And you need ₹5L in hand for a need.
Three ways to raise it, side by side:
Raising the same money by pledging your units, selling them, or borrowing a personal loan
- Interest Payable
- About ₹47,500 a yearInterest from 9.5%* p.a., only on what you withdraw
- No InterestBut the tax, and the growth you give up
- About ₹60,000 to ₹1,20,000 a year~12–24% p.a. on the whole loan, repaid by EMI
- Tax
- NoneNo units are sold
- About ₹7,800Capital gains tax on the ₹1,87,500 gain in the units sold, due at once
- NoneNothing is sold
- Portfolio Afterwards
- ₹16,00,000All of it stays invested
- ₹11,00,000Compounding restarts on a smaller base
- ₹16,00,000Untouched by the loan
- Your SIPs
- Continues, UninterruptedPledging does not touch them
- InterruptedThe long-term plan breaks
- Continues, UninterruptedBeside a monthly EMI
- Time to Funds
- Quick Approval
- Up to T+2 Working Days
- 1–7 Business Days
- Documents
- PAN & Aadhaar, via DigiLocker
- None
- Salary Slips, ITR, Bank Statement
- Income Proof
- Not Required
- Not Required
- Required
- Closing Early
- No Charge, Any Time
- Not Applicable
- Varies by Lender
Pledge Your Units
- Interest Payable
- About ₹47,500 a yearInterest from 9.5%* p.a., only on what you withdraw
- Tax
- NoneNo units are sold
- Portfolio Afterwards
- ₹16,00,000All of it stays invested
- Your SIPs
- Continues, UninterruptedPledging does not touch them
- Time to Funds
- Quick Approval
- Documents
- PAN & Aadhaar, via DigiLocker
- Income Proof
- Not Required
- Closing Early
- No Charge, Any Time
Sell Your Units
- Interest Payable
- No InterestBut the tax, and the growth you give up
- Tax
- About ₹7,800Capital gains tax on the ₹1,87,500 gain in the units sold, due at once
- Portfolio Afterwards
- ₹11,00,000Compounding restarts on a smaller base
- Your SIPs
- InterruptedThe long-term plan breaks
- Time to Funds
- Up to T+2 Working Days
- Documents
- None
- Income Proof
- Not Required
- Closing Early
- Not Applicable
Borrow A Personal Loan
- Interest Payable
- About ₹60,000 to ₹1,20,000 a year~12–24% p.a. on the whole loan, repaid by EMI
- Tax
- NoneNothing is sold
- Portfolio Afterwards
- ₹16,00,000Untouched by the loan
- Your SIPs
- Continues, UninterruptedBeside a monthly EMI
- Time to Funds
- 1–7 Business Days
- Documents
- Salary Slips, ITR, Bank Statement
- Income Proof
- Required
- Closing Early
- Varies by Lender
The Verdict:If you hold Mutual Funds, pledging them usually beats both: it costs less than a personal loan, avoids the Tax of Selling, and keeps your wealth compounding.
What Is Loan-to-Value (LTV) and How Much Can You Borrow?
The loan-to-value (LTV) ratio is the share of your portfolio’s current market value you can borrow. It depends on the type of mutual fund you pledge and is governed by RBI guidelines for banks and NBFC prudential norms.
Your LTV is your Borrowing Power. It is not fixed, but changes daily with your fund’s NAV. If NAV falls sharply and your outstanding loan exceeds the permissible LTV, a margin call is triggered.
Pledging debt funds gives you a higher LTV (75% vs 45%) and lower NAV volatility, a useful strategy if you want to maximise your credit limit while minimising margin call risk.
Note
- Shriram Credit ensures transparent LTV calculation and proactive communication.
Which Mutual Funds Are Eligible to Pledge?
| Fund Category | Eligible? | LTV Applied | Conditions |
|---|---|---|---|
| Equity Mutual Funds (open-ended) | Eligible?Eligible | LTV Applied45% | ConditionsLarge-cap, mid-cap, small-cap, flexi-cap, sector, thematic - all open-ended equity schemes on ASL |
| Hybrid/Balanced Advantage Funds | Eligible?Eligible | LTV Applied45% | ConditionsEquity-oriented hybrid schemes treated as equity for LTV purposes |
| Debt Mutual Funds (open-ended) | Eligible?Eligible | LTV Applied75% | ConditionsAll open-ended debt sub-categories: liquid, overnight, ultra-short, short, medium, long, corporate bond, gilt |
| ELSS - post 3-year lock-in | Eligible?Eligible (partial) | LTV Applied45% | ConditionsOnly units that have completed mandatory 3-year lock-in under Section 80C are eligible |
| Index Funds (equity) | Eligible?Eligible | LTV Applied45% | ConditionsOpen-ended passively managed index trackers eligible; subject to ASL inclusion |
| Fund of Funds (FoFs) | Eligible?Eligible | LTV Applied45% | ConditionsSubject to lender’s approved list |
| Fixed Maturity Plans (FMP) | Eligible?Not Eligible | LTV AppliedN/A | ConditionsClosed-ended structure; no daily liquidity; blocked at system level |
| Closed-Ended MF Schemes | Eligible?Not Eligible | LTV AppliedN/A | ConditionsNo NAV-based daily redemption; blocked at system level |
| ELSS - within 3-year lock-in | Eligible?Not Eligible | LTV AppliedN/A | ConditionsStatutory lock-in under Section 80C; cannot be pledged until lock-in expires |
| Gold ETFs & Silver ETFs | Eligible?Not Eligible | LTV AppliedN/A | ConditionsCommodity-backed; SCCL policy exclusion due to price volatility |
| Gold Savings Funds/Silver Fund of Funds | Eligible?Not Eligible | LTV AppliedN/A | ConditionsAny MF scheme with gold or silver as primary underlying is excluded |
| International/Overseas Funds | Eligible?Case-by-case | LTV AppliedSubject to ASL | ConditionsEligibility depends on AMC approval and ASL inclusion at the time of application |
Shriram Credit accepts mutual funds from all AMCs, including:
- SBI Mutual Fund
- ICICI Prudential Mutual Fund
- HDFC Mutual Fund
- Nippon India Mutual Fund
- Kotak Mahindra Mutual Fund
- Aditya Birla Sun Life Mutual Fund
- UTI Mutual Fund
- Axis Mutual Fund
- Tata Mutual Fund
- Mirae Asset Mutual Fund
Risks of LAMF & What to Look Out For
At Shriram Credit, we believe in transparent and informed lending.
The risks of a Loan Against Mutual Fund, each with the step that keeps it in hand
Your Limit Moves With the Market
What you can withdraw follows the live value of your pledged units, so it rises and falls right along with them.
Pledge Debt Funds
A higher limit, and far less movement than equity funds.
A Shortfall Raises a Margin Call
Once the loan passes 45% (equity) or 75% (debt) of the units' value, we alert you to pledge more or repay.
Watch Your Loan-to-Value
Check your dashboard and NAV to see a margin call coming.
Units May Be Sold as a Last Resort
If a margin call is not met by its deadline, we may redeem a portion of the pledged units to cover it.
Automate Payments
On-time interest avoids penal charges and guards your score.
Pledged Units Are Locked
Until the loan is repaid and the lien lifted, they cannot be sold or switched, though benefits still reach you.
Borrow for Real Needs
Use it for emergencies and short gaps, not everyday spending.
Your Limit Moves With the Market
What you can withdraw follows the live value of your pledged units, so it rises and falls right along with them.
Pledge Debt Funds
A higher limit, and far less movement than equity funds.
A Shortfall Raises a Margin Call
Once the loan passes 45% (equity) or 75% (debt) of the units' value, we alert you to pledge more or repay.
Watch Your Loan-to-Value
Check your dashboard and NAV to see a margin call coming.
Units May Be Sold as a Last Resort
If a margin call is not met by its deadline, we may redeem a portion of the pledged units to cover it.
Automate Payments
On-time interest avoids penal charges and guards your score.
Pledged Units Are Locked
Until the loan is repaid and the lien lifted, they cannot be sold or switched, though benefits still reach you.
Borrow for Real Needs
Use it for emergencies and short gaps, not everyday spending.
Note Interest accrues daily on the withdrawn amount; unpaid interest attracts a penal charge of 36% p.a., and each NACH bounce ₹100 + GST. It is not for very long-term needs: the tenure is 12 months. Not all funds are eligible, which may lower your effective borrowing capacity. If a pledged fund is removed from the Approved Securities List, you will be notified and given a cure window to substitute collateral or repay the shortfall.
Got Questions?
Loan Against Mutual Fund (LAMF) is a secured loan where mutual funds are pledged as collateral.
A Loan Against Mutual Funds (LAMF) lets you borrow money by pledging eligible mutual fund units as collateral instead of selling them. Once the units are lien marked, the loan is sanctioned based on the applicable Loan-to-Value (LTV) ratio. You can access funds for your personal needs while your mutual fund investments remain invested and continue participating in market movements, subject to market conditions.
Yes, Shriram Credit’s LAMF is better than a personal loan as it is a secured loan from a trusted NBFC and has competitive interest rates.
The minimum loan amount depends on your portfolio value and the applicable LTV. A person with a portfolio of ₹50,000 or more is eligible to apply.
No. Pledging places a lien on your mutual fund units, but the units remain invested. They continue to earn NAV appreciation and dividends throughout the loan tenure. You simply cannot redeem or sell them until the lien is released; that is, your loan is fully repaid.
At Shriram Credit, equity and debt funds are accepted to be pledged for LAMF.
Still have a question? Contact Us.
Borrow Without Breaking What You Built.
We look after you, we don’t just lend.