ICICI Bank has launched a facility that will allow its retail customers to get
loan of up to Rs 1 crore against their holdings in both debt and
equity mutual funds. Customers can avail this loan as an overdraft (OD) digitally without visiting a branch and submitting physical documents. Called, Insta Loans against Mutual Funds, the facility has been launched in partnership with the Computer Age Management Services or CAMS, a press release from the bank stated. The facility is open to customers of the Bank holding units in mutual fund schemes serviced by CAMS.
With Insta Loans against Mutual Funds, pre-approved customers can select the mutual fund scheme and number of units they wish to pledge, confirm the loan amount and set-up the OD limit using the bank's Internet banking platform. Insta Loans against Mutual Funds is an extension of the Insta LAS, an instant loan facility against equity shares, the bank stated in its press release.
Rajesh Iyer, Head- Wealth, Private Banking and LAS, ICICI Bank said, "With this facility, customers can leverage their mutual fund holdings to get access to funds instantly. We believe that in these extraordinary times of the Coronavirus pandemic, this offering will help both self-employed customers looking for funds for their business as well as salaried customers to tide over personal need for liquidity. Moreover, they will be able to avail this facility anytime, anywhere, using the Bank's internet banking platform."
This facility can be availed by marking a lien on the existing mutual funds serviced by CAMS. It is available for resident Indians and for portfolios that are individual holdings.
Key features
Here are a few features of Insta Loans against Mutual Funds, according to the bank's press release.
- Instant access to funds: The customers get access to instant liquidity by leveraging their existing mutual fund portfolio, without selling them.
- Flexibility of mutual funds: The loan can be availed against a wide range of debt and equity schemes of mutual funds serviced by CAMS and approved by the Bank
- Wide range of loan amount: Minimum loan amount is Rs 50,000 for both debt and equity schemes of MFs. Maximum loan amount is Rs 1 crore for debt schemes of MFs and Rs 20 lakh for equity schemes of MFs
- Competitive margin: Minimum 20 per cent for debt and 50 per cent for equity MFs
- Advantage of OD; No fixed EMI: Since the loan is available as an OD, the customers do not have to pay fixed EMI. They only need to pay interest on the limit utilised and for the number of the days it was utilised
- No foreclosure charges: The customers have the flexibility to repay the principal as and when they choose to, without any foreclosure charges
How to use the facility