How to Avail Loan Against SBI Mutual Funds Online in India
In times of financial need, liquidating investments may not always be the most strategic option. A loan against mutual funds provides an alternative, allowing investors to leverage their holdings without disrupting their long-term financial goals. State Bank of India (SBI) offers this facility, enabling individuals to pledge their SBI Mutual Fund units as collateral and access funds at competitive interest rates. This secured loan option ensures continued participation in market growth while addressing immediate liquidity requirements. This guide outlines the process of availing a loan against SBI mutual fund loan to help investors make informed financial decisions.
Loan Against SBI Mutual Funds on smallcase
Splitting your investments halts the power of compounding. Consider utilising your investments as collateral for a loan, maintaining their growth while meeting immediate financial needs. You can explore smallcase for availing an SBI MF collateral loan.
Unlocking a digital SBI mutual fund loan through smallcase is effortless. Individuals aged 18-70, whether self-employed or salaried residents of India or non-residents, can apply for loans up to ₹5 Crore against approved Mutual Funds held with CAMS & KFintech.
How to Get a Loan Against SBI Mutual Funds Without Selling Your MF Investments?
You can use your mutual fund investments to establish an emergency credit line swiftly without selling your holdings. Access emergency cash in under 2 working hours on smallcase by using your mutual fund holdings as collateral at the interest rate of 10.5% per annum.
If you’re wondering how to get sbi loan against mutual funds, here the SBI MF loan application process at smallcase:
- Visit the smallcase app and log in with your credentials.
- Go to the ‘More’ section of the smallcase app and click ‘Loan Against Mutual Funds’.
- Tap on the ‘Apply Now’ button to start the application process.
- Add your Date of Birth (DOB) and PAN Card details to initiate the process.
- Enter the OTP to fetch your credit limit. Calculating your credit limit on smallcase will not have any impact your CIBIL score.
- Enter and check the loan amount after checking the credit limit.
- Link your bank account.
- Select the eligible funds you want to pledge. However, remember that once mutual fund units are pledged, they cannot be sold once the loan is closed.
- At last, sign the digital agreement for your loan.
Loan Against Mutual Funds (LAMF) offers various benefits tailored to specific financial needs. Explore its potential to achieve your financial goals and ensure a prosperous future.
What is Loan Against Mutual Funds (LAMF)?
Just like you can use various assets like gold or property as collateral for a loan, Mutual Funds (MFs) can also serve as collateral. At smallcase, you can secure a loan against your MFs at a competitive interest rate of 10.5% per annum.
You can easily lien mark your mutual funds digitally with smallcase to instantly access a loan, eliminating the need to sell or redeem your investments. This loan, provided as an overdraft facility, offers flexibility in fund access and repayment without extra fees. Loan against mutual funds interest rate in SBI is charged only on the utilised amount and its duration.
Choose from various approved SBI mutual funds offered by various asset management companies in India as collateral. CAMS and KFintech (formerly KARVY) serve as reliable Registrars & Transfer Agents (RTAs) to secure the loan against your MFs. For those seeking short or medium-term financial solutions by pledging their SBI MFs, exploring the smallcase SBI loan against MFs can be a prudent option.
Features of Loan Against SBI Mutual Funds
An SBI loan against funds on smallcase allows investors to leverage their mutual fund holdings as collateral to access quick liquidity. Here are the key features of this facility:
- Loan Amount: The SBI mutual funds loan-to-value amount depends on the type of mutual fund pledged. The amount that you have withdrawn or the outstanding loan amount cannot be greater than 45% of the pledged equity MFs and 75% of the pledged debt MFs.
- Collateral Requirement: Investors can pledge their SBI mutual fund units as security, eliminating the need for additional collateral.
- Flexible Tenure: The SBI MF loan repayment options vary depending on the lender’s terms, usually ranging from a few months to several years.
- Overdraft Facility: SBI overdraft mutual funds offer this loan, allowing borrowers to withdraw funds as needed and pay interest only on the utilised amount.
- No Impact on Investment: One of the SBI mutual fund loan benefits is that investors continue to earn returns while availing the loan.
- Minimal Documentation: Compared to traditional loans, the SBI MF loan process requires minimal paperwork, making it a convenient financing option.
- Interest Rate: The SBI mutual fund loan interest rate is 10.5% per annum.
- Tax on SBI Mutual Fund Loan: Interest paid on SBI online loan against mutual funds does not offer any tax benefits, and borrowers should consider this when assessing loan costs.
Eligibility Criteria for SBI Mutual Fund Loan
Here are the SBI mutual fund eligibility conditions on smallcase for applicants to avail a loan against SBI mutual funds.
- Age: 18 – 70 years
- Investor Type: Individual investors (NRIs & HUFs not eligible)
- Mutual Funds: Must hold eligible mutual fund units in dematerialised (Demat) form
- KYC Compliance: PAN & Aadhaar-linked mobile number required
Documents Required to Avail Loan Against SBI Mutual Funds on smallcase
You can simply use our fully digital and paperless process to apply for an SBI loan against mutual funds using the smallcase app. You’ll require:
- Identity Proof: PAN Card
- Address Proof: Aadhaar Card
- Bank Account Details: For loan against MF disbursement & interest auto-debit
- Demat Account: Mutual fund holdings must be in Demat form
Upon SBI MF loan approval, the money should reach your bank account in 2 working hours. In case of any delays, you can contact our support team at help@smallcase.com.
What Happens in the Case of Active SIPs or Invest More (Lumpsum Investments) in Pledged SBI Mutual Fund?
Additional investments in SBI-pledged mutual funds, whether lump sum or through SIP orders, will not be impacted. These investments do not automatically become pledged, allowing the unit holder full control over them.
Furthermore, when you pledge funds at smallcase for loans, you temporarily halt or cancel any Active System Transfer Plan (STP) and Systematic Withdrawal Plan (SWP) that you might have started.
Maximum Loan Limit on Your SBI Loan Against Mutual Funds
Your credit limit is the highest amount you can borrow by leveraging your eligible mutual funds. The borrowing amount is determined by applying a percentage to the value of the mutual funds you wish to use as collateral. Equity mutual funds have a borrowing percentage of 45%, while debt mutual funds have a borrowing percentage of 75%. The minimum loan amount available against mutual funds at smallcase is ₹25K.
Terms of Loan Closure, Charges & Interest
Once you’ve repaid the principal and any accrued interest for the month, you can close the SBI loan against mutual funds SBI Bank without extra charges. After repayment, you can maintain the credit limit and access funds as needed, with loan against mutual fund SBI rate of interest applied only on withdrawals. Additionally, upon loan closure, you can release the collateralised MFs, enabling you to redeem or sell these investments.
Here’s a table of other fees, charges & interest rates that you might want to check out if you are considering availing your loans against mutual funds SBI on smallcase:
| Fees & Charges | Details |
| Processing Fee | ₹999 or 1% of loan amount, whichever is higher, up to a maximum of ₹4999 (plus GST) |
| Late Payment Interest | Penal Interest: 2% per month |
| Bounce Charges | ₹1200 per bounce |
| Loan Top-Up Charges | None |
| Part-Prepayment Charges | None |
| Foreclosure Charges | None |
| Mandate Inactive Charges | None |
| Mandate Verification | Charged by your bank (typically between ₹0 to ₹150) |
| Lien Removal Charges | If requested after taking loan: None If loan is canceled before disbursement: Actual processing fee applicable |
| Collection/Legal Charges | In case of default: Actuals |
Note: For the latest updates on interest rates, fees, and charges, visit the smallcase help centre for LAMF.
To Wrap It Up…
Understanding how to get an SBI loan against mutual funds can be a valuable financial strategy for individuals seeking liquidity without liquidating their investments. By evaluating the SBI MF loan charges, approval process, and benefits, borrowers can make informed financial decisions aligned with their needs and goals.
Frequently Asked Questions (FAQs)
Yes, you can consider smallcase to check your mutual fund holdings and see your eligible loan against mutual fund SBI amount. You can also avail a loan against any of your mutual fund holdings at smallcase at just under 2 working hours!
Your credit limit equals the highest loan amount obtainable with your eligible mutual funds. The amount you can borrow is determined by applying a percentage to the value of your chosen mutual funds used as collateral. Equity mutual funds have a 45% lending percentage, while debt mutual funds have a 75% lending percentage, at smallcase!
The default tenure of the loan against SBI mutual funds at smallcase is 36 months. SBI MF loan foreclosure is allowed without additional charges, enabling borrowers to close their loan early without extra financial burden. The loan tenure can also be extended beyond 36 months.
By availing a loan against your SBI mutual funds, you can utilise your investments as collateral for a loan, maintaining their growth while meeting immediate financial needs.
There are no lien removal charges if requested after taking out the loan against your SBI mutual funds.
The default tenure of the loan repayment against SBI mutual funds at smallcase is 36 months.
Yes. While you can still earn returns on your SBI mutual fund investments after pledging them for a loan on smallcase, you cannot sell or redeem your SBI mutual funds until the loan is repaid.
No. You can continue generating returns but not sell/redeem your SBI mutual funds after pledging them at smallcase.
