Now get instant loan against MF units from ICICI Bank

KEY HIGHLIGHTS

• Loan can be taken against both debt and equity MFs

• Entire processing of the loan is digital and paperless

• Maximum loan amount available upto Rs.1 crore

• Typically loan amount in such loans is upto 50% of the market value

• Will work only with mutual fund schemes serviced by CAMS

• Available for resident Indians and for portfolios that are individual holdings.

Mutual Fund (MF) investments, especially the equity MFs, give better return if investment horizon is long. That's why many invest in MFs for long term goals and don't like to liquidate their investments unless unavoidable. However, sometimes, short-term shortage of fund may require you to break your investments.

But, should you break your investment or take a loan against it?

Markets are unpredictable and only those who remain invested can get advantage of any sudden rally. If you liquidate your investment and there is a significant surge immediately after, then it may prove to be costly exit. Instead, taking a loan against MF is a better way to manage your short term funding needs as investment remains intact.

Loans against MF being secured loans have much lower interest rate than personal loans. You can get a loan typically upto 50% of the market value of your investment. Now, this facility is being made instantaneous and turned completely digital. ICICI Bank has come up with an instant loan facility against MFs. It enables retail customers to get loan of up to Rs 1 crore instantaneously by pledging their holdings in both debt and equity schemes of mutual funds.  

"In the past few years, the list of the instant products which the Bank had introduced include instant credit card, instant personal loan, instant home loan, instant car loan, instant credit called Paylater, instant overdraft facility for MSMEs and instant opening of Public Provident Fund account facility, and InstaLAS. This new facility, 'Insta Loans against Mutual Funds', is an extension of this endeavour," says Rajesh Iyer, Head - Wealth, Private Banking and LAS, ICICI Bank.

The fully digital and paperless facility allows the customers to get loan as an overdraft (OD) in few minutes, without visiting a branch and submitting physical documents. The bank has partnered with 'Computer Age Management Services' (CAMS), the country's leading registrar and transfer agency for mutual funds to offer this facility.

Speaking about enabling the digital solution, Mr. Anuj Kumar, President & CEO, CAMS, said, "Leveraging technology to augment mutual fund customer experience has been a focus area of CAMS. We are delighted that our portal is expanding further to serve mutual fund customers in newer ways. The collaboration with ICICI Bank to design a 100% digital solution for loans against mutual funds will help set higher service standards and superior customer experience. This is an important milestone in our mutual fund service journey."

'Insta Loans against Mutual Funds' is an extension of the Insta LAS, an instant loan facility against equity shares, which the bank launched over a year ago. With 'Insta Loans against Mutual Funds', the pre-approved customers of the Bank can select the mutual fund scheme and number of units they wish to pledge, confirm the loan amount and set-up the OD limit in a few clicks on the Bank's internet banking platform.

The facility is open to customers of the bank holding units in mutual fund schemes serviced by CAMS. It is available for resident Indians and for portfolios that are individual holdings. This offering comes handy to customers in the current pandemic scenario as it empowers them to take care of their liquidity by pledging assets, without stepping out of the comfort of their homes.

Also read: BT Insight: Have you filed form 15H,G yet? Do it now to save TDS on FDs