Financial Planning · 8 min read

Loan Against Securities: Borrow Against Your Mutual Fund Portfolio Without Selling

By Inderpreet Singh, QPFP · NISM Certified Investment Advisor L1 · May 2026 · 8 min read

Most investors treat their mutual fund portfolio as either fully invested or fully liquidated. There is a third option that very few use: borrow against your portfolio without selling a single unit. Loan Against Securities (LAS) is one of the most underused financial tools available to Indian investors with a meaningful portfolio.

This guide covers how LAS works, when it makes sense, the risks to understand, and how to access it through NJ Capital as an NJ Wealth client.

9 to 12%

Interest rate (LAS)

vs 12 to 18% for personal loans

50%

Loan against equity MF

SEBI-mandated margin — units stay invested

1 to 3 days

Typical disbursement

Digital process, no branch visits

How Loan Against Securities Works

LAS is an overdraft facility secured by your investment portfolio. You pledge your mutual fund units or shares as collateral. The lender (typically a bank or NBFC) creates a lien on the pledged securities and provides an overdraft credit line — typically 50% of the value for equity mutual funds and up to 80% for debt funds.

You draw from the credit line as needed and pay interest only on the amount drawn, not the full sanctioned limit. Your pledged units remain invested throughout — they continue to grow, earn dividends, and benefit from any NAV appreciation. You only lose access to them if you default or receive a margin call.

The key advantage over selling

If you sell Rs 20 lakh of equity mutual funds to fund a short-term need, you: (1) trigger LTCG tax on gains, (2) lose future compounding on the exited corpus, and (3) face the risk of re-entering at a higher NAV. LAS avoids all three. You pay 9 to 12% interest for the period of borrowing — and your portfolio continues to compound.

LAS vs Personal Loan vs Credit Card

Parameter	LAS	Personal Loan	Credit Card
Interest rate	9 to 12% (only on amount used)	12 to 18% (on full amount)	36 to 42% annualised
Processing time	1 to 3 days (digital)	3 to 7 days	Instant (pre-approved)
Tenure	On demand / revolving	12 to 60 months	Revolving (monthly)
Collateral	Your existing MF / shares	None (unsecured)	None (unsecured)
Impact on portfolio	Portfolio stays invested and grows	No impact	No impact
Prepayment charges	Nil	2 to 4% typically	None
Credit score impact	Minimal (secured loan)	Moderate	High if utilisation high

Eligible Securities and Loan Margins

Security Type	Loan Margin	Note
Equity Mutual Funds	50% of NAV (SEBI mandated)	Lien marked on units — units remain invested and continue to grow
Debt Mutual Funds	70 to 80% of NAV	Higher loan value due to lower volatility
Listed Shares (Group A)	50% of market value	Blue chip stocks get higher margin; small-cap restricted
ETFs	50 to 60% of NAV	Treated similar to equity MFs
Government Securities	75 to 85%	Highest margin — lowest risk collateral

When LAS Makes Sense

Short-term liquidity need without selling investments

Business working capital, home renovation, medical emergency — situations where you need cash for 3 to 12 months but do not want to exit a long-term investment position.

Tax-efficient bridge financing

Selling mutual fund units triggers capital gains tax. LAS lets you access liquidity without a taxable event. Particularly valuable near the end of a financial year.

Emergency fund substitute

Instead of keeping Rs 5 to 10 lakh idle in a savings account earning 3 to 4%, keep it invested in liquid mutual funds and use LAS as a standby credit line. You earn more on the corpus and pay interest only if you actually draw.

Opportunity investing

A market correction creates buying opportunity. Rather than selling other positions at a loss, take LAS against existing holdings to deploy capital in the dip — then repay from next month's savings.

Risks to Understand Before Using LAS

Margin call risk

If the value of your pledged securities falls below a threshold (typically 110% of outstanding loan), the lender issues a margin call. You must either repay part of the loan or pledge additional securities within a short window (typically 3 to 7 days).

Interest accrual on open-ended credit line

LAS is a revolving facility. If you do not actively repay, interest compounds on the outstanding balance. Treat it as a short-term instrument, not a long-term liability.

Not suitable for long-term borrowing

LAS rates (9 to 12%) are lower than personal loans but higher than home loans. For long-term borrowing needs (5 plus years), a home loan or dedicated business loan is usually cheaper.

NJ Capital LAS: How It Works for NJ Wealth Clients

As an NJ Wealth-registered MFD, SampadaSarathi clients have access to NJ Capital's LAS facility — a digital, paperless process that allows you to pledge mutual fund units held on the NJ platform and access an overdraft credit line within 1 to 3 business days.

100% digital process — no branch visit required
Lien creation on MF units via CAMS/KFintech directly
Interest charged only on amount drawn — not on sanctioned limit
Units remain invested and continue to earn returns
Repay anytime — no prepayment charges
Eligible for mutual fund portfolios maintained through NJ Wealth

For existing clients with a meaningful portfolio, LAS is a facility worth knowing about — even if you never use it. Having a standby credit line against your investments is one of the more elegant financial planning tools available.

If you want to understand whether LAS is appropriate for your situation or how to activate it as an NJ Wealth client, book a free consultation below.