Pledge of mutual fund units

Mon, 18 May 2026 00:00:00 +0000

A pledge of mutual fund units is the legal mechanism by which an investor uses mutual fund holdings as collateral for a loan, without redeeming the units. The pledged units remain owned by the investor (continuing to earn NAV-based returns and IDCW distributions if applicable), but they are locked at the depository and cannot be redeemed, switched, transferred or sold during the pledge period. On loan repayment, the pledge is released and the units return to free status.

Loan against mutual funds (India)

Wed, 13 May 2026 00:00:00 +0000

Loan against mutual funds, abbreviated LAMF, is a secured credit facility under which a bank or non-banking financial company extends an overdraft or term loan to a borrower against the pledge of mutual fund units owned by that borrower. The lender becomes the pledgee, the borrower remains the pledgor, and the pledged units stay in the name of the unit-holder. NAV appreciation, income distribution-cum-capital-withdrawal payouts, bonus units, and other corporate actions continue to accrue to the unit-holder, and mutual fund unit-holder rights over the pledged folio remain intact except for the right to redeem or switch the units under lien.

LAMF on WebNotes

Pledge of mutual fund units

Loan against mutual funds (India)