Top Financial Institutions Offering Loans Against Mutual Funds in India
Apr 11, 2025
Are you someone in search to understand and unlock the true value of your mutual fund investments without wanting to sell them? A loan against mutual funds might just be what you need! MyFi understands the need to get quick access to funds while keeping your investments intact. Lets understand everything about getting a loan against mutual funds in India and discover which financial institutions offer the best deals.
How to Get Loan Against Mutual Funds: A Simple Breakdown
Before any one market or institution is discussed, we must understand how this works, that is; before the name games and the chasing after high interest rate begins. By treating mutual fund investments like a golden ticket, you’re not just making your wealth grow, but you’re picking up that golden ticket and that’s your pass to a quick financing solution! As with any other loan, in case of an increased tenure, you need to provide the collateral by using your mutual funds investment portfolio so if the loan period is increased, you can avail the loan up to 50 to 75 percent of the value of your fund.
Loan Against Mutual Funds Eligibility: What You Need to Know
Want to know if you qualify? The eligibility criteria for loans against mutual funds in India are pretty straightforward:
You need to be between 18-65 years of age
Mutual funds must have been held for at least a year
Funds must be from reputable and recognized asset management companies
Your portfolio must have a minimum market value (this differs by lender)
India Financial Institutions for Loans Against Mutual Funds: The Top Players
HDFC Bank
This bank leads the pack with competitive interest rates with a streamlined process with minimal documentation. They offer up to 50% of your mutual fund value. They also offer a digital application process which makes it a breeze to apply!
ICICI Bank
Known for their quick processing time, ICICI Bank provides loans up to ₹5 crore against your mutual fund investments. They also offer a flexible repayment plan.
Axis Bank
With a unique innovative digital platform and relationship management, Axis Bank makes the process smooth and hassle-free. They are majorly known for their competitive interest rates.
Bajaj Finserv
As one of the leading NBFC, they offer a higher loan-to-value ratio with minimal documentation. A popular choice among investors, they’re known for their quick disbursement time.
Kotak Mahindra Bank
Standing out with their personalized services, they offer attractive interest rates with flexible tenure options.
Loan Against Mutual Funds Interest Rate: What to Expect
Loan against mutual funds interest rate generally range from 8.5% to 11.5% per annum.
Quick Reference: Interest Rate Factors
Factor | Details | Rate Impact |
Credit Score | 750+ | Best rates (8.5% - 9%) |
Below 700 | Higher rates (10.5% - 11.5%) | |
Fund Type | Large-cap & Debt Funds | Lower rates (-0.25% to -0.5%) |
Small-cap & Sector Funds | Higher rates (+0.25%) | |
Loan Amount | Above ₹50 lakhs | Better rates (-0.5%) |
Below ₹20 lakhs | Standard rates | |
Banking Relationship | Salary/Premium Account | Rate benefit up to -0.5% |
Market Conditions | Stable | Standard rates |
Volatile | Slightly higher rates |
Get Loan Against Mutual Funds: Smart Tips from AskMyFi
Start by comparing multiple financial institutions offering loans against mutual funds
Be sure to check on processing fees and prepayment fees.
You will get a better understanding of the requirements for maintaining a margin.
Also, you would want to keep a tab on your mutual fund’s performance throughout the loan tenure.
Ensure you have a good repayment plan
Making the Smart Choice with AskMyFi
We are committed to helping you make an informed financial decision. Whether you’re considering a loan against mutual funds or exploring financing options, our AI-powered platform helps you compare offers, understand the terms and conditions, and choose the best option for your needs.
Always keep in mind, while loans against mutual funds may be an excellent option, it is best to understand risks involved. Market fluctuations can affect your portfolio, sometimes resulting in additional collateral.
Don’t let your mutual fund investments just sit there - leverage them to your advantage with the right loan option. Download MyFi now to get started on your journey on smart financing!
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FAQ:
What happens to my mutual fund returns while the loan is active?
You continue to earn returns on your mutual funds even when they're pledged as collateral. The dividends and capital appreciation remain yours, making this a smart way to borrow while keeping your investments growing.
How quickly can I get a loan against a mutual fund?
Most financial institutions process loans against mutual funds within 2-3 business days. With digital applications and simplified processes, some lenders even offer same-day disbursals if all documentation is in order. At AskMyFi, we can help you find lenders with the fastest processing times.
What types of mutual funds are accepted as collateral?
Generally, lenders accept:
Equity mutual funds (at least one year old)
Debt mutual funds
Balanced funds
What happens if my mutual fund value drops during the loan tenure?
If your fund value drops significantly, the lender might ask you to:
Pledge additional mutual funds
Partially repay the loan
Providing additional collateral is called a margin call, and lenders typically initiate it if the fund value drops below 120% of the loan amount.
Can I sell my pledged mutual funds during the loan tenure?
No, you cannot sell the mutual funds that are pledged as collateral until the loan is fully repaid. However, you can:
Prepay the loan (usually without penalties)
Choose other mutual funds to replace the pledged funds
Offering a certain proportion of the funds to repay partially.
Charu Dwivedi
Charu Dwivedi is a finance content writer at MyFi, where she breaks down market trends and AI-driven investment strategies, making finance accessible for all investors.
