Mirae Asset Financial Services will now provide loans against tax-saver ELSS funds sans lock-in
Loan against Mutual Funds: Expanding the ambit of mutual fund units as collateral for retail investors, Mirae Asset Financial Services, a non-banking finance company, has added eligible tax saver schemes free from lock-in period from all the asset management companies in its list of approved mutual fund schemes to offer overdraft facilities by pledging these units.
Tax Saver Schemes are preferred by retail investors due to tax deductions under section 80C but they come with a three-year lock-in. Hence, the lender did not have any recourse to redeem during the lock-in period if a borrower failed to repay the dues. This acted as a deterrent to accept such units as collateral for lending. Based on the demand from both clients as well as distribution partners, the NBFC has now enabled lien marking of lock-in free units of Tax Saver Schemes for availing loans.
“This significant change allows us to further broaden our already extensive list of approved mutual funds. The Tax Saver Funds (ELSS) category is predominantly popular amongst retail investors as they not only save tax by investing in these funds but also create wealth for them. Among the 35 schemes that have reached the three-year mark, an impressive 23 have nearly doubled investors’ wealth in the past three years,” said Krishna Kanhaiya, CEO, Mirae Asset Financial Services (India), while expressing his heartfelt gratitude to both RTAs for facilitating the seamless digital lien marking of lock-in free units in Tax Saver Funds.
Also Read: 5 points first-time investors should know about Balanced Advantage Funds
As of September 2023, overall ELSS AUM is of Rs 1.84 lakh crore, out of which retail investors contribute the highest, around 85 per cent of Rs 1.57 lakh crore.
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