A loan against mutual funds allows investors to borrow money from financial institutions using their mutual fund units as collateral.
Individuals who hold mutual fund units in their name are eligible to apply for a loan against them
The loan amount is typically a percentage of the current market value of the mutual fund units pledged as collateral, usually ranging from 50% to 80%.
Failure to repay the loan could lead to the financial institution selling the mutual fund units, which may result in capital losses.