Loan Against Mutual Funds (LAMF)

Loan Against Mutual Funds (LAMF) is a facility that allows investors to avail a loan by pledging their mutual fund units as collateral, without redeeming their investments. This enables access to liquidity while allowing the underlying investments to remain invested, subject to applicable terms and conditions of the lending institution.

LAMF is typically offered by banks and NBFCs against eligible mutual fund schemes and is governed by the lender’s credit policies and regulatory guidelines.

How LAMF Can Benefit Clients

1) Liquidity Without Portfolio Disruption

LAMF allows investors to meet short-term liquidity requirements without redeeming mutual fund investments. This helps avoid unnecessary portfolio realignment or interruption of long-term investment strategies.

2) Potential Tax Efficiency

By availing a loan instead of redeeming investments, investors may avoid triggering capital gains taxation that could arise from selling mutual fund units.

3) Continued Market Participation

As the pledged mutual fund units remain invested, investors continue to participate in market movements, subject to market risks, while addressing interim funding needs.

4) Flexible End-Use of Funds

Funds availed through LAMF may be used for various personal or business requirements, subject to lender policies and applicable regulations.

5) Efficient Use of Existing Assets

LAMF enables investors to leverage existing investments to access liquidity, improving overall financial flexibility without altering long-term wealth plans.

Our Role at Arima Capital

At Arima Capital, we assist clients by:

Explaining the LAMF facility, its structure, and associated risks
Coordinating with lending institutions for eligible mutual fund holdings
Supporting documentation and operational processes
Ensuring clarity on terms, margins, and obligations

We do not provide lending services directly. LAMF facilities are offered by banks or NBFCs, and loan approval is subject to the lender’s discretion and policies.

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