A loan against mutual funds allows you to pledge your mutual fund units as collateral to borrow a certain percentage of their value. The funds can be used for various purposes such as business expansion, education expenses, medical emergencies, or even travel plans. As the value of the mutual fund units fluctuates, the loan amount is adjusted accordingly, giving you flexibility in managing your borrowing limits. The best part is that your mutual fund investments remain active, continuing to earn dividends or capital gains while you meet your immediate financial needs.

Similarly, a loan against shares enables you to borrow funds by pledging your equity shares as collateral. This option is particularly appealing to investors who want to access liquidity without liquidating their shares and losing out on potential market gains. The process is straightforward: you can pledge eligible shares from your portfolio, and the loan amount is determined based on the current market value and the lender’s policies. You continue to benefit from dividends and any price appreciation in your shareholdings, making this an efficient way to manage short-term financial needs while retaining ownership of your equity investments.

Both loan products offer a distinct advantage over traditional loans, as they are secured against appreciating assets, allowing for lower interest rates and greater borrowing power. In the Indian context, where investment in mutual funds and shares is growing rapidly, loans against these assets provide a crucial bridge to manage cash flow or fund critical life events without disrupting long-term financial goals. Whether you are an individual looking to meet immediate expenses or a businessperson seeking capital infusion, loans against mutual funds and shares offer a flexible and cost-effective solution.