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Mutual Fund Pledge for Loan How Unit Pledging Works in LAMF
Pledging mutual fund units creates a lien enabling loans while units remain invested and continue earning returns until lien removal.
Unit pledging allows investors to keep mutual fund holdings intact while using them as collateral for loans. The pledging process involves instructing the fund house or depository participant to place a lien on specified folios or demat units. Lenders then recognize the lien and disburse loans based on the agreed loan to value ratio. During the pledge period, units continue to earn scheme returns but cannot be redeemed until lien removal. Clearing a loan triggers lien release, enabling full redemption and ownership transfer back to the investor.