HDFC, India’s leading private bank and moneylender, in partnership with CAMS has launched an initiative to offer loans against mutual funds on digital platforms. Under this initiative, HDFC customers can now avail a customised loan against their mutual fund assets via the bank’s official website. Pledging the mutual funds online will set the customer’s overdraft limit in his/her respective HDFC account within 3 minutes as opposed to the six days when done via a non-digital platform.
The bank has been recording sales on loans worth Rs.1,000 crore every month via various digital platforms and across various products available under its wing. HDFC Bank, having a mutual fund loan portfolio of Rs 10,000 crore, anticipates its latest initiative will increase its sales and aid in its further growth.
In order to avail the loan against one’s mutual funds, it is mandatory for the customer to hold a savings account with any of the existing HDFC Bank branches. To process one’s loan approval, he/she has to fill up certain forms. The approved loan amount will then reflect as an overdraft in a current account created exclusively for this purpose.
HDFC has tied-up with 10 firms that offer mutual fund services for offering loans against the pledged mutual fund assets. The bank will be offering loans against mutual fund policies issued by any of the authorised ten firms. The loans offered against mutual funds will start at a minimum of Rs.1 lakh and can be availed up to a maximum of Rs.1 crore at an interest rate of 10.5-11 per cent. The bank has also increased the overdraft limit on loans availed against mutual funds and other insurance policies to Rs.10,000 crore.
With the aid of the new initiative, customers can customise their own loan by choosing the assets that they would prefer to pledge against the loan, calculating the eligibility for overdraft limit, opening a current account, etc., in no time. At a time of emergency, customers of the bank will not be forced to convert their pledged assets into cash if the market conditions seem a little unfavourable, the customers can instead customise their own loan to cover the cash shortage. The bank has come up with an introductory offer where it will be charging Rs.1,499 as processing fee from every customer.