Tata Capital Introduces Digital Loan Against Mutual Funds: How To Avail

Tata Capital's loan against mutual funds is backed by analytics and is a personalised product suited for diverse fund requirements of customers.

Tata Capital announced the launch of loan against mutual funds (LAMF) for customers to avail quick, hassle-free loans ranging between ₹ 5 lakh - ₹ 2 crore. This is a first-of-its-kind offering in the mutual fund industry. The financial services company of the Tata Group's digital loan offering is provided against a variety of debt and equity schemes across mutual funds (MFs). 

For this, customers can avail the loan amount by marking a lien on the mutual fund units which are managed by several asset management companies, according to a recent statement shared by Tata Capital. The loan against mutual funds is backed by analytics and is a personalised product suited for diverse fund requirements of customers.

The mutual fund industry's assets under management (AUM) has grown from ₹ 1,518,000 crore in July, 2016 to ₹ 3,532,000 crore in July, 2021, marking over a two-fold increase in a span of five years, according to AMFI (association of mutual funds in India). 

The loan amount in the digital offering is customized based upon the value of the units in the mutual fund folio as well as tenure, according to the statement. 

Some key benefits of the digital loan against mutual funds are as follows:

• It provides an end-to-end online journey for customers, starting from onboarding to disbursement
• The loan can be applied as an overdraft facility or as a term loan
• As part of the offering, the auto renewal facility is available for a tenure exceeding one year - which is subject to review of the mutual fund portfolio
• The on boarding journey is completed within a matter of minutes
• The service portal consists of features for drawdown, disbursement, additional pledging and de-pledging. It also provides an easy online execution of documents.