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Understanding Margin Calls in Loan Against Mutual Funds
Market volatility can trigger margin calls in LAMF, requiring repayment or additional collateral to maintain loan balance.
In Loan Against Mutual Funds, lenders continuously monitor the market value of pledged units. If markets decline sharply and the collateral value drops below required levels, a margin call may be issued. Borrowers must either repay part of the outstanding amount or pledge additional units.Regularly tracking portfolio performance and maintaining a safety buffer helps avoid forced redemption and ensures a smoother borrowing experience. Apply Now