HDFC Bank launches digital loans against mutual funds

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SRINAGAR: In a first in India, HDFC Bank on Thursday launched its Digital Loan against Mutual Funds (LAMF), in partnership with transfer agent CAMS. Customers can now pledge mutual fund assets online and get overdraft limit set in their account in under 3 minutes. Customers can now avail of this product through the HDFC Bank website in 3 easy steps.

With this product, customers can leverage their mutual fund (MFs) portfolio to avail funds for any contingencies or emergencies without liquidating their investments or stopping their regular investment plans/SIPs. Digital Loans against Mutual Funds is available for resident Indians and for portfolios that are individual holdings, a bank release issued here read.

The bank has collaborated with CAMS, a transfer agent for mutual funds to create a seamless customer experience. It is open to all HDFC Bank customers holding assets in at least one of the ten mutual fund houses registered with the CAMS. These ten fund houses together constitute about 60% of the total assets under management of the industry.

After the success of HDFC Bank’s industry first offering ‘Digital Loans against Securities’ launched last year, the bank has now automated the entire process for ‘Digital Loans against Mutual Funds.’

“Today, a customer has to wait for 5-6 days to avail a loan against mutual funds. Even redemption of MFs takes couple of days for the funds to be transferred to the customers’ account. With Digital LAMF, customers can design their own loan against mutual fund, choosing which assets from their portfolio they would like to pledge, calculate their overdraft limit eligibility against mutual fund, open a current account online instantly and get the money into the account; all in a matter of minutes,” it read.

Country Head – Unsecured Loans, Home, and Mortgage Loans, HDFC Bank Arvind Kapil said that Digital Loan against Mutual Fund is an industry first innovation and takes customer convenience, flexibility and access to greater heights. In emergencies, customers will not be forced to liquidate assets at less than optimal market conditions. They can instead design their own loan to tide over the cash crunch.

“We are happy to partner with CAMS on this initiative to provide completely digital access for loans against mutual funds to our customers . With this product, we hope to reach out to customers in the tier 2 and 3 markets and bring them into the digital lending fold,” he said.