Loan against Securities is a loan where you pledge your direct equity (Shares) and mutual fund investments as collateral to the lender against loan amount. In case of requirement for emergency funds, one can look at taking a loan against securities as an option to raise money – instead of redeeming existing holdings.
For providing this facility to all our valuable clients, we would like to introduce Mirae Asset Financial Services (MAF) as our strategic partner for providing Loans Against Securities.
Start with these easy steps, and you’ll be on your way to using your securities investments like never before:
What are loans against Securities?
Loan against Securities (LAS) is a type of secured loan wherein borrowers pledge their securities units like mutual funds or shares as collateral to obtain a loan from banks or Non-Banking Financial Companies (NBFCs). It serves as a short-term credit option that can be used to meet urgent financial needs without having to liquidate the mutual fund investments.
What are the interest rates and other charges applicable for Loans Against Securities?
The interest rate is around 9% p.a., and various charges such as processing fees, stamp duty, and others apply. Please refer to the “Charges” table in the Terms & Conditions section for details.
What are the minimum and maximum amounts availed through Loan Against Security?
The minimum amount is Rs 10,000/- and the maximum can go up to Rs 1 crore for equity mutual funds & shares and up to Rs. 3 crore for debt mutual funds.
Who is eligible for a Loan Against Securities?
Indian citizens aged between 18 to 75 years with a credit score of 500 or more, or new to credit, can apply for a loan against mutual funds. One PAN card can have a maximum of 3 loan accounts, loan against equity mutual funds, loan against debt mutual funds, and loan against shares respectively.
Who is not eligible for a Loan Against Securities?
Corporates, HUFs, and NRIs are not eligible and cannot avail Loans Against Securities.
Which securities are covered in the approved list for Loans Against Mutual Funds?
The security list is evaluated monthly with a large basket of mutual funds covered, including open-ended schemes of all AMCs with a scheme AUM of INR 20 crores or more. To view, the list of approved mutual funds, Click here.
What types of securities are not considered in the approved list for Loans Against Mutual Funds?
ELSS, Children Funds, Retirement Funds, Franklin Templeton, and Navi Mutual Fund schemes are not considered in the approved list. Mutual Funds held under joint holding (Except Either or Survivor) are also not eligible for pledging.
How does the lien/pledge process work in mutual funds? How long does it take to create a lien?
The pledging process with mutual funds RTAs – KFintech (previously known as KARVY Fintech) & CAMS, is digitally executed and generally takes 15 minutes for pledge creation (subject to all documents being submitted online or via DigiLocker).
How does the lien/pledge process work in equity shares? How long does it take to create a lien?
The pledging process for shares is done through NSDL, is digitally executed and generally takes up to 1 day for pledge creation (subject to all documents being submitted online or via DigiLocker).
Who owns the pledged securities?
By lien/pledging, ownership of the securities remains with the holder of the securities (the Borrower), and they continue to get potential capital appreciation and dividend income from their mutual fund investments. However, the holder cannot sell the securities while they are pledged.
Can I release a partial lien on my securities units?
You can release a partial lien digitally using the Mirae Asset Financial Services app/web.
What are the minimum and maximum loan amounts provided?
LTV or ‘Loan-to-Value’ is a ratio that lenders use to determine the maximum amount they are willing to lend to a borrower based on the value of the collateral (in this case, equity and/or debt mutual funds) that is being used to secure the loan.
What is the disbursal window for loans?
The disbursal window is from 8:00 am to 5:00 pm, except on bank holidays.
(Withdrawals request will be accepted but requests will be processed the next day. Also, withdrawals are happening on bank holidays with conditions)
What bank mandates should I be aware of?
Ensure that you have net banking and/or debit card access for the bank account mentioned while creating the bank mandate. All major banks are part of the e-Mandate, but cooperative banks are currently not part of the e-Mandate. You can check the same from here.
NOTE: This bank list keeps getting updated every day, so one should check before making any transaction.
You can refer to more FAQs here.
| Equity Mutual Funds LTV | Debt Mutual Funds LTV | No. of days to regulate |
|---|---|---|
| > 45% | – | 75 days |
| > 50% | > 80% | 7 days |
| > 55% | > 85% | 5 days |
| > 60% | > 90% | 3 days |
| > 65% | > 95% | 1 day |
The above table shows the no. of days a client will have to repay the difference if any of the above criteria is matched.
| Charges | Value | Charge at time of |
|---|---|---|
| Rate of Interest | 9% p.a. | Monthly ECS |
| Processing fees | INR 999 + GST | Loan creation |
| Stamp duty | INR 500 | Loan creation |
| Renewal fees | INR 999 + GST | After 1 year, post Borrower confirmation |
| Partial Unlien | INR 500 + GST | At the time of request execution |
| Top-up | INR 500 + GST | At the time of request execution |
| Foreclosure | N/A | N/A |
| Prepayment | N/A | N/A |
| Penal Interest rate | ROI + 4% p.a. | At the time of Default and/or Overdue |
| Bounce charge | INR 500 + GST | At the time of Default |
| Security invocation fees | INR 2000 + GST | At the time of Default |
| Bank Mandate Swap | INR 500 + GST | At the time of request execution |
| Collection fees | INR 5000 + GST | At the time of Default |
| Legal fees | INR 5000 + GST | At the time of Default |
Data is dated as on : June 2022
NOTE: Charges may change at any time without notice. To check the updated charges, Click here .
For offering the facility of Loans Against Securities to our clients, Epsilon Money has tied up with Mirae Asset Financial Services (India) Pvt Ltd. Epsilon Money is a referral partner to Mirae Asset Financial Services (India) Pvt Ltd and is not liable for any service related or any issues of any kind nor for any losses incurred by the client for entering into this transaction.
In partnership with Mirae Asset Financial Services, we offer a unique financial solution that allows you to get instant liquidity for your short-term investments. By choosing our offering, you enjoy a seamless digital process, secure transactions, and the certainty of partnering with a trusted name in the investment field. Your path to instant liquidity is just a click away!
At Epsilon, we believe that we should let you dream – leave the tension of how you will plan finance for those dreams to us. We are here to help you and guide you, every step of the way. By always doing the right thing. By gauging your risk profile, investment horizon and recommending products accordingly. By doing what is best for you to achieve your goals.
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