Get loan against mutual funds instantly

HDFC Bank has launched digital loan against mutual funds, in partnership with CAMS. The bank’s customers can now pledge their mutual fund holding to get a loan disbursed within two to three minutes. The money is credited in the customer’s current account which can be used as an overdraft facility.

The loan is available against equity equity and debt funds of 10 fund houses and only against portfolios that are single holdings. The minimum loan amount is of Rs 1 lakh and maximum of Rs 10 lakh against equity funds and Rs 1 crore against debt funds. Borrowers can get up to half of the value of their MF portfolio as loan. Since it is an overdraft facility the interest rate is applicable from the time the borrower draws down on the amount and only on the amount utilised.

“The interest rate will be decided based on the customer’s relationship with the bank and would vary between 10.5-11%,’’ said Arvind Kapil, head-unsecured loans, home and mortgage loans, HDFC Bank. In comparison, the rate for an unsecured personal loan would be in the range of 14-15%.

HDFC Bank had launched digital loans against securities last year and digital unsecured personal loans earlier. About 25-30% of the unsecured personal loans are now sourced digitally. Personal loans segment has been growing at a rate of about 30%, Kapil said.

“We expect to see good growth in the digital loan against MF because it is an instant loan and much faster than redeeming your funds, in case of an emergency,’’ he added.

How it works

• Log into myCAMS via HDFC Bank website
   
• If you don’t have my CAMS account that is opened instantly
   
• Select the funds to pledge
   
• Click on loan terms and conditions
   
• Input one-time password
   
• Overdraft facility is ready to use