Loan Against Mutual Funds: RBI Rules and LTV Limits (2026)
Loan Against Mutual Funds: RBI Rules and LTV Limits (2026)
By Ashutosh Purohit Yenmo Technologies Pvt Ltd is an AMFI-registered mutual fund distributor (ARN 361524) and a loan service provider working with RBI-regulated lenders.
Rules as of 21 October 2026. For NBFCs, this guide follows RBI's NBFC Credit Facilities Directions, 2025, as updated on 15 July 2026. For banks, it follows RBI's revised Commercial Banks – Credit Facilities Amendment Directions, 2026, in force from 1 July 2026. We update this guide when the rules change.
You want a loan against your mutual funds, and you want to know how much RBI allows. The answer depends on who lends to you: a bank, or a non-bank lender called an NBFC. As of 21 October 2026, an NBFC can lend up to 50% of the value of your equity mutual funds and of shares listed on a stock exchange. RBI puts no cap on how much an NBFC can lend in total.
A bank can lend up to 75% against equity mutual funds and 60% against listed shares. These are RBI's maximums, and each bank sets its own figure. A bank's loans against shares and equity funds are capped at ₹1 crore per person, across all banks. Before 1 July 2026, that cap was ₹20 lakh.
The short version
- NBFCs can lend up to 50% against equity mutual funds and listed shares. RBI sets no cap on the loan amount.
- Banks can lend up to 75% against equity mutual funds, 60% against listed shares and 85% against debt mutual funds. Loans against shares and equity funds stop at ₹1 crore per person.
- For debt mutual funds, RBI sets no LTV cap for NBFCs. Each NBFC uses its own policy.
- Below ₹2 crore of equity funds, a bank lending at the full 75% gives you a higher limit. Above ₹2 crore, an NBFC gives you more.
- At an NBFC, a loan above ₹5 lakh taken to invest in the stock market can be backed only by Group 1 securities.
What limits does RBI set on loans against mutual funds and shares?
RBI sets the highest LTV a lender can use, and for banks it also caps the loan amount.
LTV means loan-to-value. It is the part of your holdings' value that you can borrow. At a 50% LTV, you can borrow up to half the value of your funds. A lender can always choose a lower LTV than RBI's maximum.
| Rule (as of 21 Oct 2026) | NBFCs | Banks |
|---|---|---|
| Highest LTV on equity mutual funds | 50% | Up to 75%. Each bank sets its own |
| Highest LTV on listed shares | 50%, for NBFCs with assets of ₹100 crore or more | Up to 60%. Each bank sets its own |
| Highest LTV on debt mutual funds | No RBI cap. Lender's own policy | Up to 85%. Each bank sets its own |
| Cap on loan amount against shares and equity funds | No RBI cap | ₹1 crore per person across all banks (was ₹20 lakh). Some banks cap lower, e.g. ₹20 lakh |
| Cap on loan amount against debt mutual funds | No RBI cap | Bank's own policy |
| Extra condition | Loans above ₹5 lakh to invest in the stock market: Group 1 securities only | None |
| Source | NBFC Credit Facilities Directions, 2025, para 106, and RBI's FAQ change (updated 15 Jul 2026) | Commercial Banks – Credit Facilities Amendment Directions, 2026 (RBI/2025-26/254), para 219G, 219K, in force 1 July 2026 |
What are the rules for NBFCs?
An NBFC can lend up to 50% of the value of your equity mutual funds and listed shares. RBI does not cap the loan amount. NBFC means non-banking financial company. Many app-based loans against mutual funds in India are sanctioned by NBFCs.
The 50% limit on equity mutual funds came through an FAQ change to the NBFC Credit Facilities Directions, 2025. That change was updated on 15 July 2026.
Before it, RBI's 50% rule was written only for listed shares. Each NBFC set its own limit for mutual funds. Guides written before July 2026 may still say that.
The 50% limit on listed shares is in para 106 of the same Directions. It applies to NBFCs with assets of ₹100 crore or more. RBI says the 50% is "required to be maintained at all times". So your limit goes up and down with the market.
RBI does not limit how much an NBFC can lend against your funds or shares. Your limit depends on the value of your eligible holdings. It also depends on the lender's own policy.
One extra rule covers larger loans taken to invest in the stock market. If such a loan is above ₹5 lakh, the NBFC can accept only Group 1 securities as security for it. This rule is in para 106(2)(i). It does not affect a loan for other needs, such as a medical bill, a home deposit or running your business.
For debt mutual funds, RBI sets no LTV cap for NBFCs. Each lender decides its own limit. Check the lender's number before you pledge.
What are the rules for banks from 1 July 2026?
From 1 July 2026, a bank can lend up to 75% against equity mutual funds and 60% against listed shares. It can lend up to 85% against debt mutual funds. These limits come from RBI's revised directions for banks, RBI/2025-26/254, para 219G. They replace a February version that was due to start in April.
These are RBI's maximums. Each bank sets its own LTV within them.
Bank loans against shares and equity mutual funds are capped at ₹1 crore per person, across all banks. The cap was ₹20 lakh before. Each bank can set a lower cap, and some still stop at ₹20 lakh.
For debt mutual funds, each bank sets the loan amount by its own policy. Ask the bank for its figures.
How is my maximum loan amount calculated?
The lender multiplies the value of each eligible holding by its LTV. Then it adds up the results. It works in three steps.
- It counts only eligible holdings. Each lender keeps an approved list of funds and shares. Holdings that are not on the list don't count. Holdings that can't be pledged don't count either, for example ELSS units still in their lock-in.
- It applies the LTV to each holding. The value of a mutual fund is NAV × units, and of a share, market price × quantity. The lender multiplies this value by the LTV for that type of holding. For equity funds at an NBFC, the LTV is up to 50%.
- It adds them up and applies any amount cap. The total is your limit. At a bank, the limit for equity is then capped at ₹1 crore, or at the bank's lower cap.
You can estimate your own limit with Yenmo's loan against mutual fund calculator.
What is the margin or haircut?
The haircut is the part of your portfolio's value that the lender does not lend against. It is also called the margin. It equals 100% minus the LTV.
At a 50% LTV, the haircut is 50%. At a bank lending at 75%, the haircut is 25%. The haircut protects the lender if markets fall.
How much can I borrow on ₹10 lakh of equity mutual funds?
Say you hold ₹10 lakh in equity mutual funds. All of them are on the lender's approved list.
An NBFC lends up to 50%, so your limit is ₹5,00,000. The haircut is 50%. RBI sets no cap on the amount.
A bank lending at the RBI maximum of 75% gives you ₹7,50,000. The haircut is 25%. This is well below the ₹1 crore cap.
If the bank sets its LTV below 75%, your limit will be lower than ₹7,50,000. Check the bank's own number.
The Group 1 rule does not apply here. It covers only NBFC loans above ₹5 lakh taken to invest in markets.
Now say markets fall 20%. Your portfolio drops to ₹8 lakh. The NBFC limit falls to ₹4 lakh. The bank limit at 75% falls to ₹6 lakh.
Suppose you had drawn the full ₹5 lakh from the NBFC. You would now be ₹1 lakh over your new limit. You would need to repay that ₹1 lakh or pledge more holdings.
It helps to borrow less than your full limit. Say you draw ₹3 lakh from the NBFC instead of ₹5 lakh. Your portfolio would then have to fall 40%, to ₹6 lakh, before you went over the limit.
Does the ₹1 crore bank cap matter for bigger portfolios?
Yes. Above ₹2 crore of equity funds, an NBFC gives a higher limit than a bank.
| Equity mutual fund portfolio | NBFC at 50% (no cap) | Bank at 75%, capped at ₹1 crore | Higher limit |
|---|---|---|---|
| ₹10 lakh | ₹5 lakh | ₹7.5 lakh | Bank |
| ₹1 crore | ₹50 lakh | ₹75 lakh | Bank |
| ₹2 crore | ₹1 crore | ₹1 crore (capped) | Same |
| ₹3 crore | ₹1.5 crore | ₹1 crore (capped) | NBFC |
Up to about ₹1.33 crore of equity funds, a bank at the full 75% stays under the cap. Between about ₹1.33 crore and ₹2 crore, the bank stops at ₹1 crore. It still gives more than the NBFC. Above ₹2 crore, the NBFC's 50% gives more.
Some banks cap loans at ₹20 lakh. With such a bank, an NBFC gives more on any equity portfolio above ₹40 lakh.
Should I choose a bank or an NBFC?
It depends on how much you hold, how much you need and what the loan costs over time. The LTV is one factor. Tenure, fees and the minimum loan often matter as much.
If your equity portfolio is under ₹2 crore and you want the highest limit, a bank can lend up to 75%. An NBFC can lend up to 50%. Check the bank's actual LTV, because it may be below 75%.
If you want to borrow more than ₹1 crore against equity, banks can't go above that cap. NBFCs have no RBI cap. Check the lender's own maximum.
If you want to borrow against debt funds, NBFCs have no RBI cap and use their own policy. Banks can lend up to 85%. Check the lender's LTV for debt funds.
If you want more than ₹5 lakh to invest in the stock market, an NBFC can accept only Group 1 securities. Check whether your holdings are Group 1.
Look at the total cost over time. Tenure means how long the loan runs. Banks often run 12-month tenures with renewal or annual fees. Check the tenure, the renewal fee and the foreclosure charge, which is the fee for closing the loan early.
If you want to borrow a small amount, RBI has no rule on the minimum loan. Banks often start at ₹25,000–₹50,000. Check the lender's minimum loan.
If your funds sit with several brokers, or with CAMS or KFintech, RBI's rules don't cover this. It depends on the lender or platform. Check whether one account can take all your holdings.
The interest rate matters too. Each lender sets its own rate. RBI does not set it.
What changed in 2026?
For NBFCs, the LTV on equity mutual funds used to be left to each NBFC. RBI's 50% rule applied only to listed shares. Now the 50% also applies to equity mutual funds. This came through RBI's FAQ change to the NBFC Credit Facilities Directions, 2025, updated 15 July 2026.
For banks, the cap on loans against shares and equity funds rose from ₹20 lakh to ₹1 crore. This took effect on 1 July 2026.
Banks also have new LTV limits. They can lend up to 75% on equity mutual funds and 60% on listed shares. These are RBI's maximums, and each bank sets its own.
If a guide you are reading is older than July 2026, check its bank limits. Also check what it says about NBFC limits on mutual funds. Compare both with the table above.
Is a loan against mutual funds app "RBI approved"? How can I check?
RBI regulates lenders, which are banks and NBFCs. It does not approve apps. Many loan apps are run by loan service providers, or LSPs. An LSP works as an agent for a regulated lender.
Under the digital lending rules in Chapter III of the NBFC Credit Facilities Directions, 2025, the lender stays fully responsible for its LSP. So the useful question is not "is this app RBI approved?" Ask instead: "Which regulated lender is behind this loan, and does the setup follow RBI's rules?"
Check these four things before you pledge.
- The app names the lender. The app or website should name the bank or NBFC that sanctions your loan. Your Key Fact Statement, sanction letter and loan terms should come to your registered email or SMS. They should be on the lender's letterhead.
- The lender lists the app. An NBFC must list the LSPs and apps it works with on its own website, in a place that is easy to find. It must also say what each one does. The app should link to that page.
- Money moves only between you and the lender. The loan is paid into your bank account, and repayments go to the lender's account, not the app's. The lender pays the LSP's fees. The LSP does not collect them from you separately.
- A grievance officer is named. This is the person who handles complaints. The lender and the LSP must show this officer's contact details on their websites, in the app and in your Key Fact Statement.
Lenders must also report every digital lending app they use to RBI. If you can't find the lender's name or these details, ask before you pledge.
How do these rules apply to loans through Yenmo?
Yenmo is a loan service provider, not a lender. Loans through Yenmo today are sanctioned by Bajaj Finance Ltd, an RBI-regulated NBFC. So the NBFC rules above apply. You can borrow up to 50% against equity mutual funds and listed shares, and RBI sets no cap on the amount.
Our credit line runs for 3 years, so there is no yearly renewal. You pay a ₹0 annual fee. Foreclosure and part-payment charges are also ₹0.
You can use one account for your whole portfolio. Mutual funds held with CAMS or KFintech, mutual funds held in demat, and stocks can all back one credit line.
The minimum loan is ₹25,000. That needs about ₹50,000 of equity funds, or less in debt funds. You can borrow up to ₹5 crore online.
The interest rate is 9.89% to 10.49% p.a., set by your sanctioned amount. No loan at Yenmo is priced over 10.49% a year. You pay interest only on the amount you withdraw. There is no EMI.
In the ₹10 lakh example, a ₹5 lakh sanction falls in the ₹2 lakh–₹10 lakh slab. That slab's rate is 10.39% a year. If you withdraw ₹2 lakh, the interest is roughly ₹1,732 a month.
The processing fee starts at ₹1,649 + GST, and you pay it once. All lender charges are on the charges page.
If you'd like to see your own limit, you can check your eligibility in a few minutes.
Loan against mutual funds · See all charges · Calculate your limit · Check your eligibility
Frequently asked questions
What are RBI's rules for loans against mutual funds in 2026?
As of 21 October 2026, an NBFC can lend up to 50% of the value of equity mutual funds and listed shares, under the NBFC Credit Facilities Directions, 2025. RBI sets no cap on the NBFC loan amount. A bank can lend up to 75% against equity mutual funds, 60% against listed shares and 85% against debt mutual funds. These are RBI's maximums, and each bank sets its own LTV. Bank loans against shares and equity funds are capped at ₹1 crore per person, from 1 July 2026. For debt mutual funds, each NBFC sets its own LTV.
How much loan can I get against my mutual funds?
Multiply the value of your eligible funds by the lender's LTV. On ₹10 lakh of equity mutual funds, an NBFC lending at 50% can lend up to ₹5 lakh. A bank lending at RBI's 75% maximum can lend up to ₹7.5 lakh. Bank loans against equity are capped at ₹1 crore, and NBFC loans have no RBI amount cap.
How is the maximum loan amount calculated, and what is the usual margin or haircut?
The lender multiplies the current value of each eligible holding by the LTV for that type of holding. Then it adds up the results. At a bank, the ₹1 crore cap on equity applies after that. The haircut, or margin, is 100% minus the LTV. It is 50% on equity mutual funds at an NBFC, and as little as 25% at a bank lending at the 75% maximum. Debt fund haircuts depend on each lender's policy.
What is the LTV on a loan against debt mutual funds?
RBI sets no LTV cap for NBFC loans against debt mutual funds. Each NBFC uses its own policy. Banks can lend up to 85% against debt mutual funds, which is RBI's maximum, and each bank sets its own figure. Check the lender's number before you pledge.
Is a bank or an NBFC better for a loan against mutual funds?
It depends on the size of your portfolio and on costs. A bank can lend up to 75% against equity mutual funds and 60% against shares, but only up to ₹1 crore per person. An NBFC can lend up to 50%, with no RBI cap on the amount. At the full 75%, a bank gives a higher limit on equity portfolios below ₹2 crore. Above that, an NBFC gives more. Also check the tenure, renewal fees and the minimum loan.
How do I check if a loan against mutual funds app is RBI regulated?
RBI regulates lenders, not apps. Check that the app names the bank or NBFC that sanctions the loan. Check that the lender's website lists the app as its loan service provider. Money should move only between your bank account and the lender's account. A grievance officer should be named in the app and in your Key Fact Statement.
This article explains RBI rules as of 21 October 2026. It is for information only and is not financial advice. Lenders set their own LTVs, limits and approved lists within RBI's rules. Yenmo Technologies Pvt Ltd is a loan service provider. Loans are sanctioned and disbursed by RBI-regulated lending partners. Yenmo is also an AMFI-registered mutual fund distributor (ARN 361524).
