Frequently Asked Questions (FAQs) About LAMF on smallcase
Welcome to a comprehensive FAQs guide for Loan Against Mutual Funds on smallcase. We understand you may have questions ranging from eligibility to potential use cases. Rest assured, we’re here to answer the questions you’re looking for in these mutual fund loan process FAQs!
Getting Started with Loans Against Mutual Funds
- What is a Loan Against Mutual Funds?
Loan Against Mutual Funds is a type of loan where you can borrow money by using your mutual fund investments as collateral.
- How is it different from other loans?
Unlike some loans that might require property or a steady income or a credit score as security, a loan against mutual funds uses your MF investments as collateral. Additionally, you only pay monthly interest on the borrowed amount, and you can choose when to repay the principal within the tenure of 3 years.
- How much loan can I take against my mutual fund investments?
The loan amount depends on the value of the mutual funds you keep as collateral. Loan amounts range from ₹10,000 to ₹5 cr, depending on the lender and the value of your pledged funds.
- How long can I take the loan for?
The tenure of the loan is up to 36 months. During this tenure, you can part-prepay or foreclose the loan without any charges.
Apply for a loan today
- What will my monthly payments look like?
On a monthly basis, you only pay interest on the outstanding loan amount. Interest rates start from 9.9% p.a. For example, at 9.9% p.a. on an outstanding loan of ₹1 lakh, your monthly interest would be about ₹825 (₹1,00,000 x 9.9% / 12).
- Can this loan be used as a credit line?
Absolutely! Loan against mutual funds can be used as a credit line i.e. you can borrow and repay from a predetermined credit line multiple times without re-applying for a new loan each time you need funds.
- How long will the application process and disbursement take?
If you meet the loan eligibility criteria and have sufficient mutual fund holdings to avail a loan, the process is fully digital and the money is credited to your bank account within 2 working hours.
- How are my mutual funds impacted?
After you avail a loan, your mutual funds will be pledged as collateral to the lender. You can continue to invest and earn returns/dividends, but you won’t be able to sell/redeem your pledged mutual fund units. As you repay, you can unpledge units to the extent of the amount repaid.
- Does checking my credit limit affect my credit score?
Your credit score is not impacted if you simply calculate your credit limit before availing of a loan against mutual funds on smallcase. Checking your credit limit does not involve a hard CIBIL check. When you apply for the loan and sign the agreement, the lender runs a hard CIBIL check, which can impact your score.
- What is the process of taking LAMF?
Import your mutual fund investments → Add a bank account for receiving funds and set up a mandate for monthly interest auto-debit → Sign online loan agreement.
- How can I repay the loan?
Visit the loan servicing dashboard, click on the ‘Repay’ button, and enter the amount you want to repay. You can pay via UPI, debit card or net banking. Remember, you can make the repayments at any time before the end of your loan tenure.
- How can I close the loan?
You can close your loan anytime without any foreclosure or hidden charges. Head over to the help section of your loan dashboard or reach out to our support team to request loan closure.
- Is my data secure with smallcase?
Yes, your data is completely secure. To know more about our privacy policy, click here.
- Are my smallcase investments eligible for a loan?
Yes, if they are approved stocks and ETFs held in your Zerodha demat account. You can take a loan against securities on smallcase, alongside a loan against mutual funds.
- What will be the loan against mutual funds interest rate?
Interest rates start from 9.9% p.a. and apply only to the outstanding principal. No interest is charged on the amount you’ve already repaid.
- Can I top up my loan?
Top-up is available on loans from Bajaj Finance. You can top up your existing LAMF by pledging more mutual funds to become eligible for a higher loan amount. Top-up availability depends on your lender, so check with your lender before you apply for a top-up.
Need urgent funds? Apply for a loan against mutual funds
Credit Limit Calculation
- Which mutual funds are eligible for a loan?
To be eligible for a loan, your mutual funds need to belong to the list of eligible mutual funds prescribed by the lender.
- How many mutual funds are eligible, and from which fund houses?
Thousands of approved mutual fund schemes across equity, debt and hybrid categories are eligible. Schemes from multiple fund houses can qualify, subject to the lender’s approved list.
- Are mutual funds held in demat form eligible?
Yes, if they are held in your Zerodha demat account.
- What are the minimum and maximum required age for availing a loan against mutual fund?
You should be between 18 years to 75 years of age.
- Can I avail loan against mutual funds held in a joint account?
Yes. Jointly held mutual funds are eligible, but a co-borrower form must be signed physically and sent to the lender.
- How is the credit limit calculated?
The credit limit is calculated by taking a percentage of the current market value of the mutual funds you wish to pledge. This percentage is up to 85% for debt MFs, and as per your lender’s terms for equity MFs.
- What information is needed to calculate credit limit? Will smallcase share my data?
To calculate your credit limit, we will need your PAN, phone number, and email address linked to your mutual fund holdings. Rest assured – smallcase doesn’t share user data with any third party, so your data is completely secure.
- Will checking the credit limit impact my CIBIL score? Is it a hard check?
Checking your credit limit does not have any impact on your CIBIL score, however, it is a necessary step in order to determine your loan eligibility. It is not a hard check. A hard CIBIL check happens later, when you apply for the loan and sign the loan agreement.
- Why are some of my funds not eligible for a loa
Some of your mutual funds may not be eligible for a loan if they: are tax-saver ELSS funds under a lock-in of 3 years, are already pledged, or are not part of the lender’s approved list of eligible funds.
- I have mutual funds yet my eligible limit is being shown 0. Why?
This could happen if: the total value of mutual funds is low, MFs are tax saver ELSS funds under a lock-in of 3 years, MFs are already pledged, or MFs are not part of the lender’s approved list of eligible funds.
Application Process
- What documents will be needed to apply for the loan?
Applying for a loan against mutual funds is a completely digital and paperless process. You’ll need only your PAN (if you’ve never invested on the smallcase platform) and the phone number/email address linked to your mutual funds.
- What are the steps of applying?
Import your mutual fund investments → Add a bank account for receiving funds and set up a mandate for monthly interest auto-debit → Sign online loan agreement.
- What happens if I drop off from the application in between?
If you drop off, you can resume your application from that point at any time.
- What are the terms and conditions of the application?
Remember that your mutual funds will be pledged after availing of a loan, so you can’t sell/redeem such pledged mutual funds. The monthly interest on the outstanding loan amount will be auto-debited from the bank account you provide. Late payment interest and bounce charges are applicable in case of delay or failure of monthly interest payments, as per your lender’s terms. See LAMF interest rates and fees for current charges.
- What are some things to make sure of while applying?
For accurate loan amount calculation, ensure that you are providing all email addresses or mobile numbers linked to your mutual funds, in case of multiple email IDs/ numbers.
6. What are the charges/processing fees?
Interest rates start from 9.9% p.a. (on outstanding amount only). Processing fees and other charges vary by lender. See LAMF interest rates and fees for current fees and charges.
Adding Mutual Fund Holdings to Check Loan Eligibility
- Why are my holdings being reimported?
Your mutual fund holdings are being reimported to calculate the actual loan you would be eligible for if you decide to pledge them.
- Which email address and phone number should I use to fetch holdings?
Use the email address and phone number registered with your Mutual Fund Companies. You can find them on your Consolidated Account Statement.
Loan Amount Confirmation
- Why is my calculated credit limit different from earlier?
The loan amount you might be eligible for may be lower than your previous credit limit if your mutual funds are:
- Blacklisted by the lender/AMC
- Currently pledged
- ELSS funds under a 3-year lock-in
- The units of some of my mutual funds are less than my actual holdings. Why?
This can happen when some of your MF units are locked from selling for a certain period of time. For example, tax-saving funds have a lock-in period of 3 years. Such locked-in units cannot be used as collateral.
Linking Bank Account
- Why do I have to link a bank account?
Your linked bank account is used to receive approved loans and make hassle-free monthly interest payments through auto-debit and flexible repayments.
- Why is e-mandate required?
E-mandate is required for the auto-collection of interest on a monthly basis. This helps in avoiding any penalties due to late monthly interest payments. Interest is auto-debited on the 7th of every month, or within the next 3 working days.
3. I am getting an invalid IFSC error. What should I d
Confirm that you are entering the correct IFSC code. If that still does not work, please contact support, we’ll try to resolve your issue as soon as possible.
4. A white popup keeps loading while setting up e-mandate?
You have to enable third-party cookies to set up the e-mandate. Go to the browser settings, enable third-party cookies, and retry the process. Once the mandate setup flow is complete, you may disable it.
5. I have set up a mandate but don’t want to take a loan. What to do?
If you have set up a mandate but haven’t pledged mutual funds yet, you can simply close the process and cancel the e-mandate from your bank’s net banking portal. Your partial loan application will not be submitted to the lender.
Pledging Mutual Funds
- What happens when I pledge mutual funds?
The mutual funds are lien marked in the favour of the lender i.e. that they are kept as collateral with the lender.
- What is lien marking?
Lien marking is how your mutual funds are pledged. A lien is placed on your units in favour of the lender, so they act as collateral for your loan. You stay the owner of the units, but you cannot sell or redeem them while the lien is in place.
- Can I invest more/exit my mutual funds if pledged?
Once the mutual funds are pledged, you cannot exit or sell such holdings until you repay and unpledge them. You can unpledge units to the extent of the amount repaid. You can continue your regular investments.
- When will my funds be unpledged?
You can unpledge funds to the extent you have repaid. Once you repay any outstanding dues and close the loan, all your mutual funds will be unpledged.
- Does paying back the loan partially unpledge some mutual funds?
Yes. You can unpledge part of your mutual funds, up to the extent of the loan you have repaid.
6. What are the tax implications of pledging?
There will be no changes with respect to tax considerations for the pledged mutual funds. There would be a change of duration for calculating capital gains tax only if the mutual funds are unpledged and sold by the client, or if the mutual funds are confiscated by the lender.
- My mutual funds got pledged but I don’t want to take a loan anymore.
If you haven’t e-signed the loan agreement after pledging mutual funds, you can reach out to our dedicated customer support team to unpledge your investments. However, keep in mind that a lien removal charges may apply. See LAMF interest rates and fees for current charges.
- Will checking the credit limit impact my CIBIL score? Is it a hard check?
- Stay invested: your funds keep earning returns and your long-term goals stay on track.
- No redemption needed: you avoid selling units, exit loads and capital gains tax that a sale could trigger.
- Pay for what you use: interest is charged only on the amount you draw.
- Flexible repayment: part-pay or foreclose anytime, with no foreclosure or early repayment charges.
- Fully digital: check your limit, pledge and sign online.
- What are the risks of a loan against mutual funds?
- Market falls: if the value of your pledged funds drops, your loan may exceed the allowed limit and you may need to repay part of it.
- Liquidation: if a shortfall or dues are not cleared on time, the lender may sell pledged units to recover the amount.
- Locked units: you cannot sell pledged units until you repay and unpledge them.
- Interest costs: missed interest payments attract charges and can affect your credit scor
Signing Agreement
- The screen is stuck at “Generating your Agreement” screen. What should I do?
If the screen is stuck for longer than a couple of minutes, please contact the support team and we’ll assist you as soon as possible.
- How do I sign the agreement?
On the lender’s agreement screen, scroll to the bottom of the page and verify the OTP to sign the agreement.
Loan Disbursal
- How long does it take for the amount to get disbursed?
After the application process is completed, the loan amount will be disbursed to your bank account in a couple of hours.
- What happens post the loan application is submitted?
Once you submit your loan application, the lender will verify the details. If everything is in order, your application will be approved, and you’ll receive the funds in 2 working hours.
- It’s been more than the mentioned time and I haven’t received my loan yet. What to do?
If your loan application is taking too long to process, please contact our support team and we’ll resolve your issue as soon as possible.
Managing Your Loan
- Where can I manage my loan once active?
You can go to the ‘More’ tab on the smallcase app to view the ‘Loan Dashboard’ and manage your repayments, withdrawals, etc. in one place.
- How are my monthly dues deducted?
Monthly interest payments will be auto-debited from the bank account on which you had set up the e-mandate on the 7th of every month (or within the next 3 working days). If you prefer to pay manually, Bajaj Finance accepts payments from the 1st to 3rd and DSP Finance from the 1st to 6th of the month.
Disclaimer: This information is as of 9th October 2026 and is subject to changes. For the latest information, visit our help centre.
- How can I pay back the loan fully/partially?
You have the flexibility to repay the loan at any time. Visit the ‘More’ tab on the smallcase app to view the Loan Dashboard and tap on the ‘Repay’ button to pay back the loan. Choose the amount you want to repay, and you’re done! You can pay via UPI, debit card or net banking, with no foreclosure or early repayment charges.
- How does withdrawal work?
After you’ve repaid the entire or part of your principal, your credit line is restored, and you can withdraw cash as per your lender’s terms, up to the total amount of principal you’ve repaid i.e. you can withdraw cash without applying for a new loan. Note that as you withdraw, there will be a monthly interest on the total withdrawn amount.
Withdrawals are credited to your bank account within 1 to 2 working hours of your request. If it has been more than 2 working hours, contact our support team.
- What happens if I fail to pay my monthly instalments?
If you miss an interest payment, bounce and late payment charges apply as per your lender. See LAMF interest rates and fees for current charges.
- What happens if the value of my mutual funds suddenly drops?
The amount you have withdrawn cannot be greater than the allowed loan-to-value (LTV) of your pledged mutual funds: up to 85% for debt MFs, and as per your lender’s terms for equity MFs. Let’s say you’ve pledged debt funds worth ₹1,000, so you can borrow up to ₹850. If their value drops to ₹900, your limit falls to ₹765. So, if your outstanding loan amount is ₹800, you’ll need to repay ₹35 to bring your loan back within the allowed levels.
- What are the cases where my mutual funds can be liquidated?
- If the value of your pledged mutual funds falls and your outstanding loan amount becomes greater than the loan-to-value of the mutual funds, you have to repay a certain outstanding amount such that your loan-to-value comes back within allowed limits.
- If you’re not able to pay this amount within the time your lender specifies, the lender may recover this amount by liquidating your pledged MFs after notifying you.
- In addition to this, your mutual funds may be liquidated if the total outstanding amount is not paid by the end of the 3-year loan tenure.
- How can I close my loan?
You can request a loan closure from the help section of your ‘Loan Dashboard’ or by reaching out to the support team. If there is no outstanding amount, your pledged mutual funds will be released, and your loan account will be closed as soon as possible without any foreclosure or hidden charges.
9. What should I do if a payment is not reflected on the loan dashboard?
If the payment is not reflected on the statement after some time, please reach out to our support team and share a screenshot of the transaction for further assistance.
10. What is the frequency of interest payments?
Interest on a loan against mutual funds is payable monthly.
We hope this guide and borrowing against mutual funds FAQs was helpful in answering your queries regarding Loans Against Mutual Funds. If you have any concerns, questions, or feedback, please don’t hesitate to contact us via email at help@smallcase.com.
All About Loan Against Securities & Loan Against Mutual Funds on smallcase –
smallcase offers quick and easy disbursement of loans against mutual funds ( LAMF). Explore all about the eligibility criteria, documents required, features, and benefits of a Loan against mutual funds on smallcase
