When you need funds urgently but don't want to disturb a mutual fund portfolio you've spent years building, a Loan Against Mutual Funds Surat solution from SR Wealth lets you unlock liquidity while your investments stay invested and continue working for you.
Guided by Paresh Chaudhary — AMFI Registered Mutual Fund & SIF Distributor (ARN: 268390), APMI Registered PMS Distributor (APRN: 05763), IRDAI Licensed Insurance Distributor, 15+ years in financial markets, Founder of SR Wealth.
What is Loan Against Mutual Funds (LAS)?
Loan Against Mutual Funds (LAS), also known as LAMF, is a secured loan where mutual fund units are pledged as collateral with a bank or NBFC to access funds — without redeeming the underlying investment. It is regulated under the
RBI's guidelines for Loans Against Securities.
Key Features of LAS
- Instant Liquidity — Access funds without selling your mutual fund units.
- Retain Investment Benefits — Your holdings stay invested and continue to participate in market movements.
- Lower Interest Rates — Typically ranging from 9%–13% per annum, generally lower than unsecured personal loans, though rates vary by lender and fund type.
- Flexible Repayment — Usually structured as an overdraft; interest is charged only on the amount utilised.
- Updated LTV Limits (per RBI's February 2026 revision): Equity mutual funds up to 75% of NAV, and debt mutual funds up to 85% of NAV — though individual lenders may apply more conservative internal limits.
Important Regulatory Update (2026)
As per RBI's February 2026 revision, the maximum aggregate loan amount an individual can avail against eligible securities (including mutual funds) across the banking system is capped at ₹1 crore, effective from July 1, 2026. LTV is recalculated daily based on the current NAV of your pledged funds — if fund value drops, your lender may issue a margin call requiring additional collateral or partial repayment.
Eligibility Criteria for LAS
- Mutual fund units held in demat or physical form, from SEBI-registered open-ended schemes.
- Both individual and non-individual investors (HUFs, firms, companies) can apply.
- Loan amount depends on creditworthiness and the type/value of the pledged portfolio.
- ELSS units under the mandatory 3-year lock-in and closed-ended schemes are generally not eligible as collateral.
How to Apply for LAS
- Select a bank or NBFC offering loans against mutual funds.
- Submit an application with KYC documents and mutual fund holding details.
- The lender evaluates fund value and sanctions a credit limit based on applicable LTV.
- Once approved, funds are disbursed, typically as an overdraft facility.
Who Should Consider LAS?
- Investors needing short-term liquidity without disturbing long-term holdings.
- Business owners seeking working capital or emergency funds.
- Individuals wanting funds at rates generally lower than unsecured personal loans.
Important Risk Considerations
LAS funds cannot be used for speculative purposes, capital market investment, IPO subscriptions, or margin trading, as per RBI guidelines. If the NAV of pledged funds falls significantly, borrowers may face a margin call and could be required to top up collateral or repay part of the loan. Always compare interest rates, processing fees, and LTV terms across lenders before applying.
Why Choose SR Wealth — Loan Against Mutual Funds Surat
With 15+ years of experience in financial markets, SR Wealth helps you understand LAS options against your existing mutual fund portfolio — comparing lenders, LTV terms, and costs transparently, so you can access liquidity without compromising your long-term investment goals.
Explore Our Other Investment Solutions
LAS works well as a liquidity tool alongside a broader portfolio. Explore our
Mutual Funds to build the portfolio you can later borrow against, our
Portfolio Management Services (PMS) for customised equity portfolios, or our
Fixed Income options for stable, lower-volatility holdings.
Frequently Asked Questions About Loan Against Mutual Funds
What is the maximum loan amount I can get against mutual funds?
As per RBI's February 2026 guidelines, individuals can borrow up to a maximum aggregate of ₹1 crore against eligible securities across the banking system, effective July 1, 2026, subject to the applicable LTV ratio and lender assessment.
What is the LTV ratio for loans against mutual funds?
Following RBI's February 2026 revision, equity mutual funds can be pledged up to 75% of NAV, and debt mutual funds up to 85% of NAV, though individual lenders may set stricter internal limits.
Can I use LAS funds to invest in the stock market?
No. RBI guidelines prohibit using LAS funds for capital market investments, including buying shares, IPO subscriptions, or margin trading.
What happens if my mutual fund's NAV falls after taking a loan?
If the NAV drops significantly, your eligible credit limit reduces, and the lender may issue a margin call requiring you to top up collateral or repay part of the loan.
Does pledging mutual funds affect my capital gains tax?
No, pledging does not change the tax treatment of your units. Capital gains are calculated based on the original holding period whenever units are eventually redeemed.
Can NRIs avail a loan against mutual funds?
LAS eligibility for NRIs depends on the specific lender's policy and RBI approvals — availability varies, so it's best to confirm directly with the chosen bank or NBFC.
About the Author
Paresh Chaudhary
Founder, Shree Radha Financial Services, Surat
AMFI Registered Mutual Fund & SIF Distributor — ARN: 268390
APMI Registered PMS Distributor — APRN: 05763
IRDAI Licensed Insurance Distributor
Investing since 2012 | BE Mechanical, SVNIT Surat | Ex-L&T (15+ Years)
Disclaimer
Loan against mutual funds is offered by third-party banks and NBFCs; SR Wealth facilitates guidance but the loan terms, interest rates, and LTV ratios are determined solely by the lending institution and are subject to change per RBI regulations. Please review all loan documents carefully before proceeding.
