Loan Against Shares & Mutual Funds
An overdraft against your shares or mutual funds lets you raise money without selling — which also means without triggering capital gains tax.
Around 50% for equity, up to about 80% for debt mutual funds.
The mechanism that makes it cheap is the same one that makes it dangerous: if the market falls, you get a margin call, and it arrives precisely when everything else is going wrong.
Around 50% for equity, up to about 80% for debt mutual funds.
What to know
Interest is charged only on what you draw, not on the sanctioned limit, which makes this efficient for lumpy short-term needs. Compare it against redeeming the investment: selling equity held over a year triggers long-term capital gains tax above the annual exemption, and you lose the compounding. For a genuinely short need, borrowing against the portfolio often costs less than the tax and the opportunity cost of selling it.
Set your own drawdown limit well below the sanctioned one. Borrowing the full 50% against equity means a 20% market fall puts you in margin call territory, and the lender is entitled to sell your holdings to restore cover — at the bottom. Treating the facility as a 25% line rather than a 50% one removes most of that risk.
Your numbers
- Principal48%
- Interest52%
- Principal
- ₹50,00,000
- Total interest
- ₹54,13,879
- Total payable
- ₹1,04,13,879
- Interest as % of principal
- 108.28%
What this means.Over 20 years you repay more in interest than you borrowed. Cutting the tenure or prepaying early changes this sharply.
View the full breakdown (20 rows) →
At ₹50,00,000 over 20 years, Bank of Baroda holds the lowest advertised floor on our board.
Only these figures travel with you.
Questions
Is a loan against mutual funds better than redeeming them?
For a short, defined need, often yes — you avoid capital gains tax and stay invested, and you pay interest only on what you draw. For a long need, the interest compounds against you and redeeming is usually cleaner. The comparison is total interest against tax plus foregone returns.
What happens in a margin call?
If the value of the pledged securities falls so that your outstanding exceeds the permitted loan-to-value, the lender asks you to pledge more or repay part of the loan within a short window. If you do not, they can sell the pledged securities — typically in a falling market.
Which securities can I pledge?
Each lender publishes an approved list — usually large-cap shares, most mutual funds, and sometimes bonds. Small-cap and illiquid holdings are often excluded or heavily discounted.
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Sources
Every figure on this page is traced to the document it came from. Where a claim rests on a regulator or an institution’s own rate card, that is the link below — not a summary of it.
- [3]Home, personal, vehicle and education loan rate cards — August 2026— Lender published rate cardsas of 15 August 2026