Tata Capital Ltd today announced the launch of ‘Loan Against Mutual Funds’ (LAMF). Under this completely digital initiative, customers will be able to get quick and hassle-free loans ranging from Rs 5 lakh and Rs 2 crore against their mutual fund deposits.
Tata Capital said that the digital loan offering is provided against a wide range of equity and debt schemes across mutual funds. Customers can avail the loan amount by marking a lien on the mutual fund units which are managed by various asset management companies.
The loan amount will be customized based on the value of the units in the mutual fund folio and tenure.
As per AMFI, the Indian Mutual Fund Industry’s AUM has grown from Rs 15.18 trillion as on July 31, 2016 to Rs 35.32 trillion as on July 31, 2021, more than a 2-fold increase in a span of 5 years. Given the exponential growth in this investment category, LAMF will be best suited for customers to meet their personal or business funding requirements.
The customer availing LAMF will continue to hold his mutual funds portfolio and enjoy its benefits as well. The customer would not be required to redeem their portfolio. They will have to pay interest only on the applied loan amount.
- End-to-end online journey – onboarding to disbursement
- Loan can be applied as an overdraft facility or as a term loan
- Auto-renewal facility available for tenure exceeding one year (subject to review of the mutual fund portfolio)
- Onboarding journey is completed within minutes
- Online lien marking of Mutual Funds via CAMS API
- Service portal comprises features for disbursement, drawdown, additional pledging and de-pledging.
- Online execution of documents
- Customer can enjoy the benefits of growth and dividend received from the MF portfolio
Commenting on the launch of LAMF, Abonty Banerjee, Chief Digital Officer, Tata Capital said, “Mutual funds as an investment category has shown tremendous growth over the last decade and continues to gain momentum. Our latest digital product gives customers an opportunity to easily meet their fund needs in a seamless manner, even while retaining control over their portfolio. This is in line with our strategy of constantly offering innovative products which offer customer convenience.”