Loan against Mutual Funds is a loan where you pledge your 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 Mutual Funds 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 a strategic partner for Epsilon Money for providing Loans Against Mutual Funds.
Benefits and Features of Loan Against Mutual Funds with MAF:
Start with these easy steps, and you’ll be on your way to using your mutual fund investments like never before:
What are the interest rates and other charges applicable for Loans Against Mutual Funds?
Currently, the interest rate is 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.
Who is eligible for a Loan Against Mutual Funds?
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 2 loan accounts, one loan against equity and debt mutual funds respectively.
Who is not eligible for a Loan Against Mutual Funds?
Corporates, HUFs and NRIs are not eligible and cannot avail Loans Against Mutual Funds.
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.
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 Surivior) are also not eligible for pledging.
How does the lien/pledge process work? 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).
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 mutual fund 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.
Can I make withdrawals in tranches?
Yes, withdrawals can be made in tranches of INR 50 lakhs. You can process the next tranche once the status under “Withdrawal Request” is completed.
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.
| 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 |
| 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 |
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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MultiArk CIN No: U67100MH2022PTC377409
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