ICICI Bank has come up with a facility called 'Insta Loans against mutual funds'. Under the offer, ICICI Bank customers who have mutual fund investments in either debt or equity funds and are facing short-term cash crisis can get a loan of up to Rs. 1 crore by pledging their holdings. The loan works like an overdraft (OD) i.e. interest will be charged only on the amount used and not on the total loan amount.
Further the loan is granted online without bank branch visit and submission of physical documents i.e. is a completely digital and paperless process.
Certain 'pre-qualified' account holders who are invested in mutual funds registered with CAMS and also have a savings account with ICICI Bank are eligible to avail Insta Loans against mutual funds. Further for the offer only resident Indians and those maintaining portfolios in individual holding are eligible.
Which Mutual Fund Schemes Can Be Pledged To Avail Insta Loan From ICICI Bank?
For the mutual fund schemes that are approved by the bank for availing loan, one can refer the link https://www.icicibank.com/managed-assets/docs/personal/loans/list_MF.pdf. When a retail customer applies for Insta loan against mutual funds, a lien is marked on the current mutual funds serviced by CAMS, before the loan is processed.
Processing charges of Insta Loan against Mutual Funds and Interest Rate
For the processing of such a loan, bank would charge Rs. 500 plus GST and interest rate is fixed at 9.9% in case of equity funds and 9.4% for debt funds.
Features of ICICI Bank's Insta Loan Against Mutual Funds - Instant loan:
-Instant loan: Customer get funds within a few minutes by leveraging their mutual fund holding, without actually selling them.
- Wide choice for pledging mutual fund units: The loan is made available against a broad list of both debt and equity funds that are registered with the CAMS and approved by the bank.
- Loan amount ranges between Rs. 50000 to Rs. 1 crore: Minimum loan amount sanctioned under the offer against both debt and equity schemes is Rs. 50,000. While maximum for equity funds is Rs. 20 lakh and that for debt funds could be as high as Rs. 1 crore.
- No fixed EMI like payment: As the loan is sanctioned as an OD, borrowers would need to pay interest only on the limit amount utilized and for the number of days it was used.
- No foreclosure charges: The customers can repay the principal as and when they desire, without any foreclosure charges
Steps To Apply For ICICI Bank Insta Loans Against Mutual Funds?
• Log in to ICICI Bank Internet Banking using your login credentials
• Go to 'Investment & Insurance' and then click on 'Insta Loan Against Mutual Funds'
• Select the mutual fund type that you wish to pledge for availing loan
• At this stage you need to confirm the application request at CAMS portal using One-Time Password (OTP) authentication
• Now you need to go through the terms and conditions for Insta loan and accept the same
• Enter the OTP you get on your mobile and your loan against mutual fund overdraft (OD) account will be opened instantly
• And as and when you confirm mutual funds on which lien has to be marked, the limit will be set in the OD loan account.
It is to be noted that loan against mutual funds must be sought out for meeting liquidity needs over a short term.