HDFC Bank launched its Digital Loans against Mutual Funds (LAMF), in partnership with transfer agent CAMS. Mutual fund’s digital loans can be availed in three steps via HDFC Net banking

HDFC Bank has partnered with registrar and transfer agent, CAMS, to launch the facility for its customers to avail of digital loans against mutual funds.

Here is how to avail HDFC-CAMS MF loan

Digital loans against mutual funds can be availed in three steps via Net banking:

Step 1: Log in to myCAMS via HDFC Bank’s Net banking portal and select which mutual funds you want to pledge from your portfolio

Step 2: Click on loan terms and conditions

Step 3: Input one-time password (OTP) and the overdraft will be ready to use in your account.


How it works

The MF units are pledged with the bank and a current account is opened in your name. You need to sign an agreement paper and complete the account opening formalities. After entering into a loan agreement with the lender, it then asks the MF registrar, like CAMS or Karvy to create a lien against the units. If the units are in demat form, the process is much faster.

The loan amount is sanctioned at a certain interest rate and tenure and you need to pay only when you use the money and for the number of days the money is used. Only interest is to be paid on a monthly basis, while the principal has to be paid back at the end of the tenure.


How much loan can you take?

The quantum of loan or the overdraft will depend on the nature and market value of the MF units.

While some lenders offer loans up to 70 percent of the net asset value (NAV), the others may restrict up to Rs 50 percent of NAV.

In case of debt funds, it can be around 20 percent of NAV. The maximum loan amount can also be capped at say Rs 20 lakh to up to Rs 7.5 crore.

Interest rate

The interest rate in banks is linked to its bank’s marginal cost of lending based rate (MCLR) MCLR with a mark-up. Get the rate confirmed from the bank, while currently, it is around 11 percent with most banks. In case the loan is from an NBFC, get to know the rate before you proceed.


There is a processing fee that you need to pay in availing such an OD facility. It can vary across lenders and can be 0.75 percent of the loan amount with a certain cap at say Rs 50,000. Some lenders also ask for an annual renewal charge of say Rs 1,000. As an introductory offer, in the HDFC-CAMS loan scheme, the bank will be charging a processing fee of Rs 1,499 per customer.