Thursday 24 May 2018

HDFC Bank launches Digital Loans against Mutual Funds (LAMF) facility.

HDFC Loan against Mutual Funds

HDFC Bank, India’s leading private sector lender, has launched instant digital loan facility against Mutual Funds. The initiative is an industry first and is a part of HDFC Bank’s on-going digital transformation strategy. Thanks to the internet, banking has become more and more convenient and the future of banking is growing increasingly digital. India has leapfrogged into the era of innovation and Indian banks like HDFC are at the forefront for adopting change.

After the success of Digital Loans against Securities facility, HDFC Bank has now automated the entire process for Digital Loans against Mutual Funds (LAMF). HDFC Bank has partnered with CAMS to provide hassle-free service to its customers.  With LAMF, customers can now pledge mutual fund assets online and get overdraft limit set in their account in under 3 minutes. Customers can now avail of this product through the HDFC Bank website in 3 easy steps.

With this product, customers can leverage their mutual fund (MFs) portfolio to avail funds for any contingencies or emergencies without liquidating their investments or stopping their regular investment plans/SIPs. Digital Loans against Mutual Funds is available for resident Indians and for portfolios that are individual holdings.

One can avail Digital Loan against Mutual Funds (LAMF) through the website of HDFC Bank in 3 easy steps through Net Banking:-

    • Login to myCAMS via HDFC Bank website and select which mutual funds they would like to pledge from their portfolio
    • Click on loan terms and conditions
    • Input one-time password (OTP) and overdraft will be ready to use in their account.

HDFC Bank has collaborated with CAMS, a transfer agent for mutual funds to create a seamless customer experience. It is open to all HDFC Bank customers holding assets in at least one of the ten mutual fund houses registered with the CAMS. These ten fund houses together constitute about 65% of the total assets under management of the industry.

With paper-based loan processing, the customer generally has to wait for 5 to 6 days for loans against mutual funds. Even redemption of mutual funds takes 2 – 3 business days. With Digital LAMF, customers can design their own loan against mutual fund, choosing which assets from their portfolio they would like to pledge, calculate their overdraft limit eligibility against mutual fund, open a current account online instantly and get the money into the account; all in a matter of minutes. Instant loan facility like LAMF can be beneficial during emergencies.

Key benefits of Digital LAMF:

    • Instant availability of money in the account within minutes.
    • Available against both Debt & Equity Mutual Funds
    • Customer retains mutual fund portfolio without liquidation
    • First-time borrowers without a credit history can access loans
    • Interest applied only on amount utilised
    • Available across the country on HDFC Bank website
    • New Loans and Enhancements can be done online.

Mr. Arvind Kapil, Group Head, Unsecured Loans, Home and Mortgage Loans, HDFC Bank at the launch of Digital LAMF
Digital Loan against Mutual Fund is an industry first innovation and takes customer convenience, flexibility and access to greater heights. In emergencies, customers will not be forced to liquidate assets at less than optimal market conditions. They can instead design their own loan to tide over the cash crunch.  We are happy to partner with CAMS on this initiative to provide completely digital access for loans against mutual funds to our customers . With this product, we hope to reach out to customers in the tier 2 and 3 markets and bring them into the digital lending fold. - Mr. Arvind Kapil, Group Head – Unsecured Loans, Home, and Mortgage Loans, HDFC Bank.

The minimum loan amount is fixed at Rs 1 lakh, while there is a limit of Rs 10 lakh for loans on equities and Rs 1 crore for debt mutual funds. HDFC Bank is clocking loan sales of Rs 1,000 crore per month through digital platforms across products and expects it to go up further with the launch of Digital Loans against Mutual Funds.

- Chaitanya Kulkarni.

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