Loan Against Mutual Funds for Working Capital

Businesses need to maintain working capital to ensure smooth operations and cover day-to-day expenses. It provides the necessary liquidity for purchasing inventory, managing cash flow, paying salaries, and addressing unforeseen costs. Managing working capital effectively is essential for the financial health of a business.

A loan against shares can help businesses strike a balance between maintaining enough working capital to meet their obligations while also investing in growth opportunities.

inventory Management

INVENTORY MANAGEMENT

Inventory management is essential for businesses to ensure optimal stock levels, minimise carrying costs, and avoid stockouts or overstock situations. Efficient inventory management improves cash flow and streamlines operations, leading to increased profitability and success.

Rent and Utilities

RENT AND UTILITIES

For every business to run effectively, there are some fixed costs like rent and utilities. Rent, being a fixed cost, constitutes a considerable portion of the budget. Utilities, including electricity, water, and internet, are essential for daily operations and can significantly affect monthly expenses.

Payroll

PAYROLL

Every business pays the employees for their services rendered during a specific period, usually on a weekly, biweekly, or monthly basis. This includes not only the employees' salaries or wages, but also any bonuses, commissions, overtime pay, and benefits such as health insurance, retirement contributions, and paid time off.

Repairs and Maintenance

REPAIRS AND MAINTENANCE

Repairs and maintenance are unforeseen but significant expenses for businesses, as wear and tear or unexpected breakdowns can occur. Regular upkeep and addressing repairs promptly are essential to avoid disruptions, maintain productivity, and ensure the longevity of assets and equipment.

Advertising and Marketing

ADVERTISING AND MARKETING

Advertising and marketing are crucial for any business to reach its target audience, build brand awareness, and drive sales. Businesses also advertise in media that reach certain markets, in addition to traditional media like newspapers and general interest publications.

Features and benefits of our loan against mutual funds

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Features and benefits of a Bajaj Finserv Loan Against Mutual Funds

Watch this video to get a quick view of the salient features of our Loan Against Mutual Funds

  • Pre-assigned loan limit

    Pre-assigned loan limit

    Get a pre-assigned loan limit of up to 90% of the value of your funds. Maximum loan limit of up to Rs. 5 crore

  • Approved funds

    5000 + approved funds

    With over 5000 funds from 40+ AMCs, get loan with just 3 documents. The loan amount will vary based on the fund type.

  • Interest on withdrawn amount

    Interest on withdrawn amount

    The interest is charged only on the amount you have withdrawn from your pre-assigned loan amount.

  • No sell-off mutual funds

    No sell-off mutual funds

    No need to sell your mutual funds. Get funds at attractive rates while continuously earning returns on your funds.

  • Tenure

    Tenure of up to 36 months

    Convenient tenure and repayment options starting from 7 days to 36 months.

  • Loan limit based on fund type

    Loan limit based on fund type

    The final loan limit depends on the type of fund (equity, debt, hybrid etc ), and the value of the fund. Check the applicable credit limit against each fund.

  • Pre-approved offers for new customers

    Pre-approved offers for new customers

    We have pre-approved offers for our existing and new customers. To check, all we need is your mobile number.

  • Dedicated customer portal (My Account)

    Dedicated customer portal (My Account)

    Download your loan statement, release funds and manage your loan online with our customer portal- My Account.

  • Extra credit for increased share value

    Extra credit for increased share value

    If the value of your mutual fund increases during the tenure of the loan, you can avail extra credit against the lien marked funds.

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Eligibility criteria and documents required

Anyone can apply for our loan against mutual funds online, as long as they meet the four basic criteria mentioned below. Also keep a few documents handy while applying for loan against mutual funds.

Eligibility criteria

  • Nationality: Indian
  • Age: 18 to 90 years
  • Employment: Salaried, self-employed
  • Security value: Minimum Rs. 50,000

Documents

  • PAN card
  • KYC documents: Aadhaar/ passport/ voter’s ID
  • Consolidated Account Statement

Corporates/ HUF/ LLP/ Partnership/ Trust/ Sole Proprietorship can apply for loan against mutual funds of up to Rs. 1000 crore, by reaching us at las.support@bajajfinserv.in.

How to apply for a loan against mutual funds

Video Image 00:49
   

Step-by-step guide to apply for loan against mutual funds

Step 1: Click on the ‘Apply Now’ button.
Step 2: Enter your mobile number to Sign in and click ‘GET OTP’.
Step 3: Enter the OTP sent to your mobile number. On successful verification, you will be redirected to our online application form.
Step 4: Enter your basic details like – PAN, DOB and email ID.
Step 5: Check your loan eligibility by entering your security name and quantity.
Step 6: Choose the loan amount you wish to avail.
Step 7: Get your KYC done using Digilocker or by manually uploading the documents.
Step 8: Enter your bank details and verify.
Step 9: Proceed for e-agreement and e-mandate by authenticating it via OTP.
Step 10: Your loan will be disbursed after successful pledging and verification

  • Did you know?

    You can continue earning returns on investments while accessing funds

  • Did you know?

    You pay interest only on the amount you utilise

  • Did you know?

    You can avail extra credit against

  • Did you know?

    You can manage your loan online with our customer portal

Interest rate and charges

The following charges are applicable on loan against securities:

Types of fees

Charges applicable

Interest rate
Up to 20% per annum

Processing fee

Up to 4.72% of the loan amount (inclusive of applicable taxes).

Prepayment charges

Full prepayment - Up to 4.72% (inclusive of applicable taxes) on the outstanding loan amount as on the date of full prepayment

Part-prepayment - Up to 4.72% (inclusive of applicable taxes) of the principal amount of loan prepaid on the date of such part-prepayment

Annual maintenance charges/ renewal fee

Up to 1.18% (inclusive of applicable taxes) on the sanctioned amount

Bounce charges

In case of default of repayment instrument, Rs. 1,200/- per bounce will be levied.

Penal interest

Delay in payment of monthly instalment shall attract penal interest up to 36% per annum applicable on the monthly instalment outstanding, from the respective due date until the date of receipt of monthly instalment.

Stamp duty (as per respective state)

Payable as per state laws

Brokerage charges*

As applicable at actuals

DP charges**

As applicable at actuals

Pledge confirmation charges**

As applicable at actuals

Pledge invocation charges**

As applicable at actuals

Demat share transfer charges (post invocation)**

As applicable at actuals
Legal charges As applicable at actuals

*Charges levied by Broker to BFL and the same is being passed on to the clients

**Charges levied by NSDL/ CDSL to BFL and the same is being passed on to the clients

Frequently asked questions

I am looking to apply for a loan against mutual funds. How do I avail it from Bajaj Finserv?

The loan against mutual funds facility available through the Bajaj Finserv app is only applicable for individuals, for loans up to Rs. 5 crore. We also provide offline loans against mutual funds up to Rs. 1000 crore to Corporates/ HUF/ LLP/ Partnership/ Trust/ Sole Proprietorship. The final amount approved will depend on the applicants' credit histories, the worth of the funds pledged, and other factors at Bajaj Finance Ltd. ("BFL"sole )'s discretion. For further information on using this service, please contact us at las.support@bajajfinserv.in.

Which funds are accepted under a loan against mutual funds?

You can avail of a loan against mutual funds by lien marking the 5000 + funds. Click here to check our approved list of mutual funds.

What is the loan-to-value offered against the mutual funds provided?

The loan-to-value currently offered against mutual funds are as follows:

For Mutual Funds: up to 90% of the value of your funds.

Please note that the above are subject to change depending upon the applicable regulations and internal policies of BFL.

What is the tenure of a loan against mutual funds?

The tenure of the loan 7 days to 36 months. Any renewal of the loan/facility shall be at the sole discretion of BFL.

How many funds are approved for availing a loan against mutual funds?

For sanctioning loans against mutual funds, we have 5000 + approved schemes, units of which are acceptable to BFL. The list of approved securities may be modified by BFL from time to time as per the internal policies and procedures of BFL.

Whom can I contact in case I need any assistance?

For any assistance with regard to a loan against securities you can write to us at las.support@bajajfinserv.in.

Is it possible to make a part prepayment/ foreclosure before the end of the loan tenure?

Yes, it is possible. You may make a part-prepayment or foreclose the entire loan before the end of the tenure.

Where can I view the list of securities that are pledged to BFL for availing loan against securities facility?

You can view the list of securities pledged by you to BFL by viewing the IVR (Interim Valuation Report) available under View Statements in the LAS service section.

I need more funds against the mutual funds already lien marked. How can I raise a request for additional disbursement?

BFL offers loans up to 90% of the value of your funds, where the valuation of your funds is updated every 5 mins. Hence, if the value of your funds increases during the tenure of the loan, the eligible pre-assigned loan limit will increase. Similarly in case the value of fund falls, the pre-assigned loan limit will reduce proportionally. This would be subject to “Sanction limit” not getting breached.

To raise a request for additional disbursement, please choose the 'Disbursement Request’ option in the Loan against Securities Service Section available under the ‘My Relations’ tab.

Please note it is subject to LTV being continued to be maintained with respect to the securities pledged and principal outstanding.

How frequently does the price of my mutual fund scheme get updated in the Bajaj Finserv app/ BFL portal?

For mutual fund schemes, it is updated at the end of every day.

What is the frequency of interest payments

Interest on a loan against mutual funds facility is payable monthly.

Is my interest applicable to the entire loan limit?

No. The interest is charged only on the loan amount that you have drawn down or the outstanding loan amount.

What is the interest payment cycle for a loan against mutual funds?

The interest cycle is calculated from the 7th day of each calendar month to the 6th day of the succeeding month. Interest due towards a loan against securities is generated on the 7th of every month.

Funds pertaining to which AMCs can be pledged to avail a loan against mutual funds?

All AMCs registered with CAMS (Computer Age Management Services) and K-Fin Technology (Registrar) can be pledged to avail of a loan against mutual funds.

What documents are required for opening a loan against mutual funds account?

Opening a loan against mutual funds account through the Bajaj Finserv App with respect to individual Borrowers and which is subject to successful KYC completion.

For easy and smooth onboarding, we recommend keeping the below documents handy:

- PAN card
- Proof of Identity and Address (Aadhaar, Passport, Driving Licence, Voter ID etc.)
- Fund holding statement

What is the process of marking lien on mutual funds?
  1. Share your holding statement at Las.support@bajajfinserv.in
  2. Lien letter shall be prepared by us on the free units & sent back to via mail along with Bajaj Covering letter for your attestation
  3. Shares the docs back with us at Las.support@bajajfinserv.in & your lien request letter will then further be submitted to the AMC
  4. AMC will review and lien mark post verification

*Final loan amount shall be calculated basis of the units & price of effective lien marked mutual funds.

When will I receive the funds after applying for a loan against mutual funds?

Post successful execution of agreement and additional documents as required by BFL, and lien marking of mutual funds, the loan amount will be disbursed to your registered bank account within minimal time.

What happens when the price of my mutual funds falls?

Up to 90% LTV is always required to be maintained for loan against funds facility. LTV may alter as a result of regulatory Changes. Any shortfall in the maintenance of the 90% LTV occurring on account of movement in the fund prices shall be filled within 7 business days.

Further, in case the Loan to Value falls more than 85% then BFL will go ahead with the liquidation of mutual funds with an intimation to the Borrower.

How can I make good the shortfall?

You can repay the shortfall or mark lien on additional mutual funds to make the shortfall good.

What if I am unable to fulfil the shortfall within 7 business days?

In case you fail to fulfil the shortfall within 7 business days, Bajaj Finance Limited holds the right to sell the lien marked mutual funds to make good the shortfall.

When can I release my mutual funds?

You can release securities, provided you are not in shortfall and have excess withdrawable funds available. The request will be processed within minimal time post-verification.

What are the minimum and maximum required age for availing a loan against mutual fund?

To avail loan against mutual fund, an individual should be between 18 to 90 years of age.

How does a loan against a mutual fund work?

A loan against a mutual fund is a type of borrowing that allows individuals to avail of a loan from a lender by pledging their mutual fund units as collateral.

The major risk associated with taking a loan against mutual funds is the possibility that the value of the pledged units may fall and result in the borrower needing to pledge additional mutual funds or repay the loan. If the borrower fails to repay the loan amount, the lender may liquidate the mutual fund units to recover the amount owed.

The terms and conditions of the loan depend on the lender.

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