Loan Against Mutual Fund

This is very similar to loan against shares. You can get a loan by pledging your mutual fund units. The mutual fund schemes should be part of the lenders list of approved schemes. The loan amount to be disbursed is calculated as percentage of the NAV of the mutual fund units. Different percentages are applicable for equity and debt mutual fund schemes. You do not need to have a demat account to take loan against mutual funds. The Registrar and Transfer Agent (RTA) will mark lien against the mutual fund units pledged by you. Once you repay the loan, the lien will be removed from the mutual funds.

Loan Against Shares

You can also get loan against shares owned by you. The loan amount to be disbursed is calculated as percentage of the market value of the shares. You will have to pledge your shares to the lender. The shares should be part of the lenders list of approved securities. The shares will not be transferred to the lender. They will remain in your demat account. The depository will mark lien against the shares pledged by you. Once you repay the loan, the lien will be removed from the shares.