Partial Unpledge Process in LAMF

Introduction: What is Partial Unpledge in LAMF?

In Loan Against Mutual Funds (LAMF), you pledge your mutual fund units as collateral to secure a loan. However, as you repay the loan, you may want to release some of those pledged units. This is known as partial unpledge.

It allows you to regain control over a portion of your investments while keeping the loan active.

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What Does Partial Unpledge Mean?

Partial unpledge refers to releasing a portion of pledged mutual fund units after reducing your outstanding loan or improving your loan-to-value (LTV) ratio.

You don’t need to close the entire loan to do this.

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When Can You Request Partial Unpledge?

You can initiate partial unpledge when:

• You have repaid part of your loan
• Your portfolio value has increased
• Your LTV ratio is within acceptable limits

Lenders ensure sufficient collateral remains after release.

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Key Condition: Maintain Required LTV

Before approving unpledge:

• Lender checks remaining collateral value
• Ensures LTV remains within allowed limit

Example:

• Portfolio: ₹5,00,000
• Loan: ₹2,00,000
• LTV: 40%

You can safely unpledge some units while maintaining required margin.

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Step-by-Step Partial Unpledge Process

1. Check Loan Eligibility
   Ensure your outstanding loan allows partial release

2. Raise Unpledge Request
   Submit request via lender app, website, or support

3. Lender Evaluation
   Lender calculates updated LTV and eligibility

4. Approve Unpledge Request
   You receive OTP or authorization request

5. Processing via Depository/Registrar
   Units are released from lien

6. Units Become Free
   You regain full control over released units

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Processing Time

• Typically: 1–3 working days
• May vary depending on platform and registrar

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Where the Process Happens

• Demat holdings → NSDL/CDSL
• Folio holdings → CAMS/KFintech

Both handle lien removal securely.

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Charges for Partial Unpledge

• Nominal fees may apply
• Typically ₹50–₹250 per request (varies by provider)

Always check lender terms.

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Benefits of Partial Unpledge

1. Regain Investment Control
   Freed units can be redeemed or switched

2. Reduce Collateral Lock-in
   Only required units remain pledged

3. Better Portfolio Flexibility
   Rebalance investments if needed

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Risks to Consider

1. Reduced Margin Buffer
   Less collateral means higher risk of margin calls

2. Market Volatility Impact
   If markets fall, remaining collateral may become insufficient

3. Frequent Requests
   Too many unpledges may incur charges or operational delays

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When Should You Do Partial Unpledge?

• After significant repayment
• When market value has increased
• When you need liquidity from specific funds

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When to Avoid Partial Unpledge

• During volatile market conditions
• When close to maximum LTV
• If repayment capacity is uncertain

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Example Scenario

• Initial portfolio: ₹6,00,000
• Loan taken: ₹3,00,000

After repayment of ₹1,50,000:

• Outstanding: ₹1,50,000

You can unpledge part of the units while maintaining safe LTV.

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Best Practices

• Maintain buffer after unpledge
• Avoid aggressive collateral release
• Monitor NAV regularly
• Plan unpledge with repayment strategy

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Strategic Insight

Partial unpledge helps optimize your collateral usage—freeing excess while maintaining loan efficiency.

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Long-Term Financial Perspective

Using partial unpledge smartly ensures better control over your investments without compromising loan stability.

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Final Thought

Partial unpledge in LAMF is a powerful feature that allows you to release excess collateral as your loan reduces.

It improves flexibility, reduces lock-in, and enhances portfolio management.

However, it must be done carefully to maintain sufficient margin and avoid risk during market fluctuations.

Loan Against Mutual Fund is subject to applicable interest rates and credit assessment. Mutual fund units pledged as collateral are subject to market risks. Please read all loan-related documents carefully.