Distribution platforms look at offering loans against MF units to investors

Investors can get these loans at 9-10 per cent interest rate

Mutual fund (MF) platforms and distributors are planning to offer loans against MF units to investors looking for short-term emergency liquidity but don’t want to withdraw MF investments planned for a longer term.

“This facility can help investors in need of short-term capital, such as those with temporary cash-flow issues in their businesses or even individual investors, who expect the markets to rebound and don’t want to exit at this stage,” said Gaurav Rastogi, founder and chief executive officer at Kuvera.in, an online investment platform.

Rastogi says the facility has seen strong interest recently amid the Covid-19 pandemic, which triggered economic uncertainty.

Investors