How CRED Cash+ allows users to borrow without redeeming mutual funds

CRED has recently rolled out CRED cash+, a digital credit facility that enables its members to borrow against their mutual fund holdings without redeeming their investments. According to Akshay Aedula, who leads product and growth at CRED, the offering is designed to provide liquidity while allowing members to continue earning market-linked returns.

“CRED cash+ allows members to borrow against their mutual fund investments without disrupting long-term growth,” Aedula said. “It offers a flexible line of credit with interest rates starting at 8.99%, making it a cost-effective alternative to traditional loans.”

The borrowing process is completely paperless and digital. There is no minimum mutual fund AUM (Assets Under Management) requirement, and users can pledge open-ended equity, debt, or hybrid mutual funds managed by AMCs registered with Registrar and Transfer Agencies (RTAs) such as CAMS or KFintech.

These RTAs facilitate lien marking, allowing users to retain ownership and earn dividends or capital gains even while their units are pledged.
Close-ended funds, Exchange Traded Funds (ETFs), and Fund of Funds (FoFs) are currently not eligible under the scheme.

The platform applies RBI-mandated loan-to-value (LTV) ratios and recommends an optimal basket of mutual fund units to pledge, striking a balance between diversification and maximum eligible credit. Once units are pledged, members can borrow, repay through EMIs, and redraw multiple times without pre-payment or foreclosure charges.

“Since the mutual funds remain invested, members continue to benefit from market returns while avoiding premature redemptions and associated tax implications,” Aedula said. “This even helps them maintain their credit score by improving their credit mix.”

CRED aims to address the limited awareness around loans against mutual funds in India.

“LAMF remains a relatively unknown product, primarily because it was historically offered to high-net-worth individuals through high-touch, non-digital channels,” Aedula explained. “For most retail investors, it’s been overshadowed by more traditional options like gold loans or personal loans.”

With CRED cash+, the company seeks to democratise access to LAMF by offering a secure, accessible, and user-friendly product. “Our goal is to help members meet liquidity needs today, while their investments continue to compound for tomorrow,” Aedula added.