Loans Against Mutual Funds, or LAMF, is a service provided by some Indian Banks and NBFCs. This service allows a borrower to pledge their Mutual Funds (MFs) for a loan. With this, you can retain your investments as well as be able to get a loan using the value of the same, as this will also help you with your short-term liquidity needs.
LAMF is made similar to an overdraft (OD) facility, where you pledge units of your MFs that are registered with CAMS/KFintech and receive the loan amount granted according to the Loan-to-Value (LTV) ratio that is determined by the type of the MF. Additionally, here the Interest rate is charged only on the amount you have withdrawn from the grant, and according to the duration the loan was used. In this article, we will be talking about the following six selected banks and NBFCs, which offer the best LAMF services-
- State Bank of India (SBI)
- HDFC Bank
- ICICI Bank
- Axis Bank
- Tata Capital
- Bajaj Finserv
Loan-to-Value Ratio (LTV)
- Equity/Hybrid/ETF funds: All the banks allow up to 50% LTV
- Debt/FMP funds: LTV ranges from 75% (SBI) up to 80% (ICICI, HDFC, Axis)
Maximum Loan Amounts:
- SBI: ₹10 lakh (equity), ₹5 crore (debt)
- ICICI: ₹20 lakh (equity), ₹1 crore (debt digital) .
- HDFC & Axis: Up to 80% of NAV; typical minimum ₹50,000 .
- Tata Capital & Bajaj Finserv: Provide Similar LTV; sometimes up to ₹20 lakh for equity and ₹1–5 crore for debt
Cost
| Institution | Equity Rate (%) | Debt Rate (%) |
| SBI | 11.50 | 11.50 |
| ICICI Bank | ~12–12.5 | ~12–12.5 |
| HDFC Bank | ~9.75–11 | ~9.75–11 |
| Axis Bank | 9.5–11 | 9.5–11 |
| Tata Capital | 8–20 | 8–20 |
| Bajaj Finserv | 9.25–12 | 9.25–12 |
Also read: Top Performing Gilt Funds in 2025: Do You Have Them in Your Portfolio?
The Typical Market Range is
- SBI: Floating rate = 1‑year MCLR(9.5%) + 2.5% = 11.50% p.a. from Apr 1, 2025.
- HDFC & Axis: Equity LAMF starts at ~9.75%, debt up to ~80% LTV
- ICICI: ~12–12.5% (for equity LAMF).
- Tata Capital: 8–20%
- Bajaj Finserv: 9.25–12%
NOTE: Even though banks such as ICICI Bank and SBI Bank are providing at a high interest rate, the given rates are the most common ones, i.e, the given bracket is not defined. According to the bank’s website, SBI rates start at 9% and ICICI at 8.35%.
Fees & Charges
- Processing fees: Range from 0.35% to 5% (min ₹1,000).
- AMC / renewal: ₹1,000/year typical at SBI; Tata Capital, Bajaj Finserv, and Axis could charge 0.1–1.18%.
- Foreclosure/prepayment: Usually nil (SBI, HDFC, Tata Capital, and Bajaj Finserv).
- Penal interest: Can be steep—15%–36% p.a.
Requirements
- Age: 18-75 years with proof of address, ID, and income
- Brokerage Requirement: The MFs must be registered with CAMS or Kfintech, where the investor’s name and PAN must match.
- Services to:
- SBI and HDFC: Individuals only.
- ICICI: Equity for individuals; debt extended to businesses & entities
- Risk Management
- Margin maintenance: If NAV falls and LTV exceeds the threshold, the borrower must top up collateral or repay part of the loan. Otherwise, the lender may liquidate pledged units.
- Interest debits: They are charged monthly on the withdrawals only. Some banks, such as SBI, allow interest repayment with flexible tenure and no EMI schedule, resulting in only the principal being due at the end of the tenure
- Credit score: As there is a collateral already, LAMF may not require a credit score, yet again, a default may still affect your profile
| Comparative Table | ||||
| Bank / NBFC | LTV (Equity / Debt) | Rate (Equity) | Max Loan (Equity / Debt) | Charges & Fees |
| SBI | 50% / 75% | 11.50% | ₹10 L / ₹5 Cr | 0.5% proc fee, ₹1,000 renewal, no prepay fee |
| ICICI Bank | 50% / 80% | ~12–12.5% | ₹20 L / ₹1 Cr (digital) | Paperless, interest-only, no foreclosure fee |
| HDFC Bank | 50% / 80% | ~9.75–11% | ₹10 L | Digital, transparent charges, no foreclosure fee |
| Axis Bank | 50–85% / 80%? | 9.5–11% | ₹10 L | Minimal charges, quick disbursal |
| Tata Capital, Bajaj Finserv | Tata Capital, Bajaj Finserv | Tata Capital, Bajaj Finserv | Tata Capital, Bajaj Finserv | Tata Capital, Bajaj Finserv |
Who Should Take an LAMF
- Borrowers who are ready to stay invested in their MFs for a long time and do not need to liquidate their assets in the short term.
- Those who require irregular needs of cash flow, as LAMF is similar to an overdraft, mostly benefit those borrowers who would take a loan irregularly.
- Customers looking for lower interest rate loans, as there is collateral given the interest rates are lower, which would benefit the borrowers.
Risks to Keep in Mind
- Volatility Risk: A markdown in the market would reflect on your MF’s NAV, which would result in a margin call or liquidation of units.
- High Penalties: If you fail to repay the loan amount, the penalty charges are comparatively high, as they could be in the range of 15%- 36% p.a.
- Always a short-term debt: Most of the LAMFs are short-term (<12 months), and there are additional charges to renew them.
- Loan Cap: Equity MF can only be used for small loans(Rs 10 L- Rs 20 L), for larger ones, you will have to go for other NBFCs or keep debt MF as collateral.
Summary
With each of the institutions having their own pros and cons, let’s give you a brief distinguishment among each one of them. SBI – one of the lowest rates and an all-around package with transparent terms. HDFC Bank and ICICI Bank- Ease of doing the transaction via digital features and better LTV for debt MF. Tata Capital and Bajaj Finserv- You can use these NBFCs for business and debt-oriented portfolios, as you get a loan up to Rs. 1- 5 Cr. Axis Bank provides you with a little of every aspect discussed above, with competitive mid-tier rates of 9%- 11%.
Before you lock into LAMF services, make sure you consider your mutual fund mix, desired loan amount, and risk appetite. Reading this article has helped you get the picture of the LAMF services provided in India, but as these rates keep changing, it is recommended to check the latest rates and services from the lender’s website before deciding.
Written by Adithya Menon
