Loan on Mutual Funds as a Flexible Funding Solution
The difference is significant — especially when you pay interest only on what you use and only for as long as you use it.
aditya singh 
The best financial tools are the ones that work quietly in the background, ready when you need them, without forcing you to make compromises. A loan on mutual funds is exactly that kind of tool.
Most mutual fund investors think of their portfolio as one-dimensional — it grows over time, and you redeem when you need the money. But there is a second dimension that very few investors actually use: the ability to borrow against your mutual fund units without selling them. This is what makes a loan on mutual funds genuinely flexible.
The Core Concept
When you take a loan on mutual funds, your units are lien-marked through CAMS or KFin Technology. The units remain in your account, continue to earn returns at the prevailing NAV, and are simply marked as pledged — meaning you cannot sell or switch them until the loan is cleared. In return, you receive a credit line to draw from as needed.
With Bajaj Finance, you can access up to 50% of the value of equity mutual funds and up to 90% of debt mutual funds. The minimum portfolio value required is Rs. 50,000. Loan amounts start from Rs. 10,000 and go up to Rs. 1,000 crore for individuals.
Why the Flexibility Is Real
Unlike a personal loan where you receive a fixed sum and pay EMI monthly, a loan on mutual funds is a revolving credit line. You have a limit and use it as and when needed.
Need Rs. 2 lakh today? Withdraw it. Repay in three weeks. Your interest is only for those three weeks on Rs. 2 lakh. Need Rs. 1 lakh two months later? Withdraw again from your available limit. This flexibility makes it a genuine funding solution for unpredictable financial needs — medical expenses, business working capital, one-time payments, or a cash crunch that resolves within months.
The Interest Rate Advantage
The interest rate on a loan on mutual funds from Bajaj Finance starts from 8% per annum, charged only on the utilised amount. Compare this to personal loans (12–18%), business loans (14–20%), or credit cards (30–40% annualised). The difference is significant — especially when you pay interest only on what you use and only for as long as you use it.
The interest rate on loan against mutual funds is market-driven and subject to revision. Always check the current rates on the Bajaj Finance website before applying. Processing fees are up to 4.72% inclusive of applicable taxes.
Over 5,000 Eligible Schemes
Bajaj Finance accepts mutual fund units from over 5,000 schemes across 40+ AMCs. This includes equity funds, debt funds, and hybrid funds registered with CAMS or KFin Technology. ELSS funds are not eligible due to their lock-in. For most of the mutual fund universe, eligibility is strong.
Your SIPs Keep Running
Taking a loan on mutual funds does not stop your systematic investment plan. SIPs continue as scheduled. New units accumulate. The lien is only on the specific units you pledged at application. Fresh SIP units are not automatically pledged and remain freely available.
This means your long-term wealth building continues uninterrupted while you address short-term funding needs. That is genuinely flexible — in both directions.
How the Application Works
The process is completely digital. You apply online on the Bajaj Finance platform, complete KYC through Digilocker, select schemes to pledge, and verify your bank account. The lien is marked electronically through the RTA. Funds are typically available within 24 to 48 hours. No branch visits, no physical documents.
One Thing to Watch
Because the loan is tied to NAV, and NAVs change daily, your drawing power fluctuates. If markets fall sharply, your LTV may breach the permissible limit and trigger a margin call — a request to pledge more units or partially repay. Bajaj Finance updates valuations every 5 minutes during market hours.
The best protection is to borrow conservatively relative to your total portfolio. Keep a cushion, and market volatility becomes manageable. For any investor with a meaningful mutual fund portfolio, this facility changes how you respond to financial surprises — instead of redeeming in panic, you borrow smartly.
