Should you go for loan against mutual funds?

Recently, a cousin of mine called up late one night to ask – “My mom needed a sudden surgery. She doesn’t have insurance and the medical bill is likely to run to Rs 30 lakh. Should I take a loan against my mutual funds to pay the bill?” 

This surprised me because I knew for certain that she had at least Rs 40 lakh invested in mutual funds. Why not simply redeem them to raise the cash? 

“My mutual funds have been doing very well and I don’t want to interrupt the returns, you know. They are part of my retirement savings and I will be retiring in 10 years’ time”, she said. 

The fintech lender who had partnered with the hospital had pitched this loan option to her as a hassle-free way to settle her bills without her having to ‘disturb’ her MF investments. 

This episode alerted me to the fact that loans against mutual funds are now very popular, with folks using them for all kinds of purposes, from dealing with emergencies to punting on F&O (futures and options). 

Should you go for loan against mutual funds?

How loan against mutual funds work

Indian banks and NBFCs have been offering loans against securities for a long time now. The eligible securities were traditionally insurance policies, fixed deposits, shares and investments in small savings schemes. In recent years, mutual fund units have been included. 

A host of banks and NBFCs offers loans against mutual fund units online, on the following terms. 

  • Amounts ranging from Rs 25000 to Rs 5 crore. 
  • Interest rates of 9.99% to 12%, usually cheaper than personal loans because they are backed by collateral
  • Processing fees of 0.5% to 5%  
  • Tenures from 7 days to 36 months 
  • After a digital KYC, loans are extended quickly against the pledge of units online. 
  • Each lender has an approved list of mutual fund schemes against which you can take loans. Usually, the funds should be registered with CAMS, K Fintech or in a demat account. You can individually select the schemes you would like to pledge. 
  • Margins for loans against debt funds range between 10% and 25%. Margins for loans against equity and hybrid funds are at 50-60%. 
  • These loans work like overdrafts or revolving credit. On pledging your units, the lender opens an account much like an overdraft account. You can withdraw any part of the loan amount and will pay interest only on the amount withdrawn. 
  • Lenders allow prepayment of these loans if you have excess funds. But some levy prepayment charges going up to 5% of the outstanding amount. 
  • Penalties for delayed repayment range from 24%-36% per annum.  

Why loan against mutual funds is a bad idea

Most people seem to be drawn to loans against MFs because they are so easy to take. They probably see pledging MF holdings as more painless than pledging jewellery or an insurance policy. Your bank or MF distributor may also advise you against selling your MFs because thy stand to make a commission based on the assets you hold.  

But in most situations, redeeming your MF holdings is far better for you, financially, than taking a loan against them. Here’s why. 

Many people think that pledging their MF holdings instead of selling them, will leave their wealth ‘undisturbed’ as they’ve worked so hard to build it. This is flawed logic. 

It doesn’t consider that the loan will make an even bigger hole in your net worth than selling your investments. When you take a loan of say Rs 30 lakh from a lending entity at a 12% annual interest for 36 months, you end up paying the lender Rs 40.8 lakh to close out the loan. 

To understand this, all you need to do is to visualise your personal net worth as your assets minus liabilities. A loan expands your liabilities and thus reduces your net worth by Rs 40.8 lakh.

This is without taking into account the other hidden costs of taking a loan, such as processing charges, account maintenance charges and prepayment charges that add another 4-5% to the loan value.  

Therefore, your net worth takes a hit of over Rs 41 lakh though you actually need only Rs 30 lakh. Now, many people believe that their MF investments can easily make up that extra Rs 11 lakh if they just pledge and hang on to their equity funds. Based on the past 10-year CAGRs of 12-13% pa from equity funds, they think a 11% or 12% return over the next 2-3 years is manageable. 

But this ignores the fact that equity funds do not deliver returns in a linear or predictable fashion. They will have some negative years, some years of single digit returns and some positive years, which lift up their CAGR in the long run. It would be quite unrealistic to assume that equity funds will appreciate at say 11% or 12% per annum over short periods such as 2 or 3 years to cover your loan costs, especially when a bull market has been on for a while.  

Many folks are loath to redeem their MFs, especially equity funds, because they see good returns on their portfolios today. They are loath to ‘interrupt’ these returns to meet unplanned expenses. 

This is why financial planners recommend having a separate emergency fund apart from your goal-based portfolios. The very purpose of parking emergency money in MFs is to redeem them when needed.

But this apart, the returns that you see today on your equity MF portfolio are essentially past returns. As MFs are market-linked products, there’s no guarantee that past performance will be repeated in future. 

Selling your equity funds today may look like the wrong decision because you think that they will continue to deliver a 13% or 14% CAGR. What would you say if the stock markets were to correct sharply next month? Foregoing future returns which are uncertain in any case, is better than paying interest to a lender. 

More importantly, redeeming your current MF holdings does not stop you from making further investments to benefit from future returns on the same funds. 

If you are worried about missing out on future returns, the best thing to do will be to set up SIPs immediately after a redeeming your MFs, to rebuild your MF wealth. 

If that Rs 30 lakh loan against equity MFs entailed an EMI of Rs 30,000 a month, you can invest the EMI amount in equity SIPs. If the stock markets continue to deliver a 13% CAGR, a Rs 30,000 SIP will get you to Rs 30 lakh in just 5 years’ time. 

If markets crash, you can pat yourself on the back on cashing out at right time, and anyway use SIPs to rebuild your corpus at lower market levels. So you win either way. Similar logic will work for redeeming from debt funds too.

When you pledge your MF holdings with a lender, you do not get a loan for the entire value of holdings pledged. Based on their margin rules, lenders extend loans only for a part of the value pledged.  

Most lenders levy a margin of 50% on equity MF holdings and 25% on debt MF holdings.  Therefore, to take a Rs 30 lakh loan against equity MFs, you’d have to pledge Rs 60 lakh of your MF portfolio. Should your emergency needs extend beyond Rs 30 lakh, you cannot withdraw from the remaining Rs 30 lakh MF holdings even if you have them as the lender has a lien on them. For debt MFs, you will need to pledge Rs 45 lakh worth of units to get your hands on Rs 30 lakh. 

When you pledge your MF units, they will continue to earn returns. But then, you will be deprived of liquidity to meet other expenses, which is one of the biggest benefits of investing in MFs as opposed to other assets. 

Pledging your gold jewellery or insurance policy to get a loan makes slightly more sense, because these are illiquid assets. Try as you might, you cannot liquidate your jewellery at current market prices of gold and get instant cash for it. You will take big haircuts towards making charges, wastage etc. Ditto with insurance policies where premature surrender can mean bearing surrender costs. 

But MFs are liquid investments, where you get to exit at zero extra cost at the prevailing NAV (you need to pay capital gains tax of course).  Pledging them to get a loan after sacrificing a margin of 25% or 50% makes little sense.

Most folks borrowing through the MF route seem to be assuming that markets can head only one way – Up. But with stock markets enjoying a stellar run in the last few years, the probability of a correction has risen. Should the value of your MF holdings fall soon after you take a loan, you risk getting a margin call from the lender. 

In the above example, suppose my cousin took a Rs 30 lakh loan against her equity MFs worth Rs 60 lakh and the stock market corrects by 15% this month. The lender would then approach her to cough up another Rs 9 lakh to fulfil the margin requirement of 50%. This is because the correction would have reduced the value of the pledge to Rs 51 lakh. If she can’t put up the additional margin, she may need to repay the loan to the extent of Rs 4.5 lakh. 

While margin calls are more likely with equity or hybrid funds than debt funds, they can sometimes play out in debt too, if a sharp spike in interest rates leads to mark-to-market losses. 

How to redeem your mutual funds

One reason people cite for taking a loan against MF units instead of selling them, is the incidence of capital gains tax

It is true that capital gains tax will take a bite out of your redemption proceeds when selling your MF units. 

While you cannot avoid this tax, you can reduce tax incidence by planning your redemptions carefully.  

  • When selling equity funds, you can choose to sell funds which you have held for 12 months or more, to reduce the tax incidence from short term capital gains tax (15%) to long term capital gains tax (10%). 
  • You can try and spread equity fund redemptions over two financials years instead of one, if you are close to the financial year end). This can help you save upto Rs 2 lakh from capital gain tax. Long term capital gains (LTCG) on equity funds are exempt from tax to the extent of Rs 1 lakh a year. 
  • You can apply the same strategy to older debt fund holdings too. On debt funds bought before March 31 2023, LTCG rates of 20% with indexation apply, if you held them for 36 months or more. Slab rates apply if you held them for shorter periods. On debt funds bought after March 31 2023, however, there’s no scope for tax planning as capital gains are taxed uniformly at your slab rate. 
  • Selling 3 year plus holdings can help with hybrid funds too. Lower rates of 20% LTCG with indexation can be availed in the case of hybrid funds whose debt exposure is less than 65%. 
  • If you own some loss-making funds, you can sell them to set off the loss against capital gains on your profitable funds. 

Finally, you can also minimise the dent to your long-term wealth (arising from redeeming prematurely) by selling over-valued assets and retaining under-valued assets. 

Today, stock markets in India are fairly expensive after a good rally over the last 5 years. Bond markets on the other hand are just recovering from a bear market caused by rising rates post-Covid. 

If you need money for an emergency, it would not be a bad idea to redeem equity-oriented funds today, ahead of debt-oriented ones. 

So, is there any situation in which taking a loan against MFs could be better than redeeming them? I can think of just one. If you need a large sum of money for a very short period such as a week or a month, then redeeming your MF holdings and paying capital gains tax only to reinvest the entire money a little later, will not make sense. 

In this case, a loan against MFs could make sense because the interest (plus processing and prepayment charges) you pay could work out to be lower than the taxes you pay on selling your MFs. But you need to make this comparison for yourself before taking the loan. 

More like this

23 thoughts on “Should you go for loan against mutual funds?”

  1. Loan against mutual fund makes more sense if you are 200% sure that there will be a cashflow from source other mutual funds to fully pay off the loan. Also the loan duration should not be more than 1 month.

  2. Ganesan Rajagopal

    I think loan against mutual funds is a good idea in many circumstances. Aarati pointed out one such situation when you’re borrowing for a short time like a week or a month. But given that the loan is an overdraft, it makes sense even for longer duration as long as you can prepay the loan as soon as you can. I have done in the past and having a ready overdraft upto 50% of your funds or shares can be a great alternative or an additional buffer to your emergency fund.

    By redeeming mutual funds you’re not only paying capital gains tax, you also lose time in the market. I disagree a SIP can make up for it, that’s essentially betting that you can time the market (i.e current valuations are too high and SIP would get better returns). I would rather borrow against MFs, pause any SIPs and repay as fast as possible.

    Also the lock-in is not really a big deal, if you do want to exit the funds held in lien, most of the lenders will facilitate this quite easily. If you’re financially disciplined, loan against shares/mutual funds, or even better a home saver kind of loan can be very handy for quick access to funds.

  3. Preferably Anonymous

    Good analysis! I took a short 3-month LAMF because I needed funds the same day for which MF redemption takes time. It was quick and easy through Mirae Asset Securities or something (not the AMC, maybe a sister concern) and they charged only 9% interest at the time. They would send DAILY email/sms which got annoying. So I blocked all their emails/sms and then I forgot about this loan. It is auto debit so no missed payments but I would have closed it within a week instead of the 3 months if I hadn’t forgot about it.

  4. Very good article. In your view, do these points also hold true when deciding on taking a home loan v/s selling MF investments to fund the house purchase?

    1. Thank you. I am a conservative investor so would always liquidate investments if I could take a smaller loan. But in a home loan, the tax break reduces your interest outgo. So if your MFs can outperform that, a loan can work out better. But uncertainties related to equities will remain.

      1. one of the other advantage of selling MF investments to buy a home (if its your first or second house) you get entire capital gains waived off (sec 54F)… so instead of loan, selling MF makes sense… the equivalent home loan EMI can be ploughed back into MF every month.

  5. There is another case where loan aginst MF may be a better option eg slump in market after covid like situation? But one cannot be 100% sure that market has bottemed out.

  6. sirsa.chandraa

    I am an MFD and I share a similar opinion.

    If my clients need money, I simply ask them to redeem their MFs.

    I ask them to imagine that they are borrowing from their own portfolio @12% rate of interest and ask them to pay EMI in the form of future SIPs to their own portfolio.

    1. That’s a brilliant way to think about it….. “borrowing from their own portfolio”

    2. Thanks for sharing Chandraa ji. Borrowing from own portfolio and then paying future EMIs in form of SIP s – that’s a good way of thinking!

    3. Preferably Anonymous

      Kudos to you! That is a great idea! Unfortunately, most MFDs are not like you and get a bad rap for being commission hungry at the cost of investors.

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Subscription and access to content services fall under the purview of Goods and Services Tax (GST) as per the current indirect taxation policy, Government of India. Unless otherwise indicated, prices stated on our website are exclusive of applicable GST, any applicable value added tax (VAT) or other sales taxes. We are a business-to-consumer (B2C) service provider and we do not commit to provide any input tax credit on GST charged on subscription to our Research Service.

We may change the Subscription Fees and charges then in effect, or add new fees or charges which will take effect at the end of the client’s subscription period, by giving notice in advance and an opportunity to cancel renewal of the subscription.

Subscription Access & Renewal: Subscription to the Website commences immediately on the realisation of payment of the Subscription Fees. Subscriptions are set to be renewed automatically at the end of the subscription period.

Unless the client notifies us before the end of his/her subscription period, or the client cancels the auto-renewal mandate within the period specified by law, that the client does not wish to renew his/her subscription, the client’s subscription will renew for the period defined by the client’s subscription plan. We will charge the subscription using the same payment method that you previously used.

Although the client may notify to us his/her intention to his/her subscription, such notice will only take effect at the end of his/her then current subscription period, and he/she will not receive a refund other than as set out under Clause 8 in these Terms.

The client may notify us of his/her wish to cancel his/her subscription by sending an email to [email protected]. The client must provide at least 5 business days advance notice for this to be implemented.

Refunds: There can be no cancellation and refund of subscription fee paid once the subscription is active, other than as stated in Clause 8 of these Terms. If the client is entitled to a refund as specified under Clause 8 of these Terms, the RA will credit that refund to the card or other payment method used by the client to submit payment, unless it has expired - in which case the RA will contact the client to proceed with the refund. If we do issue a refund or credit due to circumstances outside the obligations specified under Clause 8, we are under no obligation to issue the same or a similar refund in the future.

General disclaimers: The recommendations made herein in the Research Services are expression of views and/or opinions and should not be deemed or construed to be advice for the purpose of purchase or sale of any security, nor a solicitation or offering on any investment/ trading opportunity on behalf of the company, AMC, insurance company, or issuer of security referred to herein.

The content and research reports generated by the RA does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities.

The information/ opinion/ views mentioned in research reports or by the RA are not meant to serve as a professional guide to the client or recipients of this Report. The research report, recommendation, or any other content published by the RA do not assure or guarantee any minimum or fixed returns to the client or recipients of the reports/ recommendations/ content.

Use of this information is at the client’s own risk. The client must make his/ her own investment decisions based on his/her specific investment objective and financial position and using such independent advisors as he/she believes necessary. The services rendered by the RA are on a best-effort basis. All information in the content or research report of the RA is provided on an as is basis. Information is believed to be reliable but the RA does not warrant its completeness or accuracy and expressly disclaim all warranties and conditions of any kind, whether express or implied.

While due care has been taken to ensure that the disclosures, information, and opinions given are fair and reasonable, PrimeInvestor Financial Research Pvt Ltd and/or none of its officers, directors, partners, employees, agents, subsidiaries, affiliates or business associates shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way whatsoever from the information/ opinions/ views contained in the research report and recommendations that form part of the Research Service, and/or mails, social media or notifications issued by PrimeInvestor Financial Research Pvt Ltd or any other agency appointed/authorised by PrimeInvestor Financial Research Pvt Ltd. Returns and performance figures mentioned in the research report represent past performance and should not be constituted to be future returns or guaranteed returns.

Any agreements, transactions or other arrangements made between the client and any third party named on (or linked to from) the Website are at your own responsibility and entered into at your own risk. Any information that you receive via the Website, whether or not it is classified as “real time”, may have stopped being current by the time it reaches you. Market price information may be rounded up/down and therefore may not be entirely accurate.

The purpose of these disclosures is to provide essential information about the Research Services in a manner to assist and enable the prospective client/client in making an informed decision for engaging in Research Services before onboarding.

History, present business and background: PrimeInvestor Financial Research Private Limited is registered with SEBI as Research Analyst with registration no. INH200008653. The Research Analyst got its registration on August 19, 2021 and is engaged in offering research and recommendation services.

Disciplinary history: There are no pending material litigations or legal proceedings against the Research Analyst. As on date, no penalties / directions have been issued by SEBI under the SEBI Act or Regulations made thereunder against the Research Analyst relating to Research Analyst services.

Details of the RA's associates: No associates.

Usage of Website Content: This Website is controlled and operated by the RA. All material, including research reports, recommendations, portfolios, ratings, lists of financial products, illustrations, statements, opinions, views, photographs, products, images, artwork, designs, text, graphics, logos, button icons, images, audio and video clips and software (collectively, “Content”) are protected by copyrights, trademarks and other intellectual property rights that are owned and controlled by the RA or by other parties that have licensed their material to us.

Except where otherwise agreed in writing with the RA, material on the Website is solely for the client’s personal, non-commercial use. Except as provided below, the client must not copy, reproduce, republish, upload, post, transmit or distribute such material in any way, including by e-mail or other electronic means and whether directly or indirectly and the client must not assist any other person to do so.

Without the prior written consent of the RA, modification of the materials, use of the materials on any other web site or networked computer environment or use of the materials for any purpose other than personal, non-commercial use is a violation of the copyrights, trademarks and other proprietary rights, and is prohibited. Any use for which the client receives any remuneration, whether in money or otherwise, is a commercial use for the purposes of these Terms.

The client may occasionally distribute a copy of a research report, or a portion of the same, from the Website in non-electronic form to a few individuals without charge, provided the client includes all copyright and other proprietary rights notices in the same form in which the notices appear, original source attribution, and the phrase “Used with permission from PrimeInvestor Financial Research Pvt. Ltd.”

While the client may occasionally download and store research reports or information from the Website for his/her personal use, he/she may not otherwise provide others with access to the same. The foregoing does not apply to any sharing functionality we provide through the Website that expressly allows the client to share Content or links to Content with others. In addition, the client may not use Content he/she has downloaded for personal use to develop or operate an automated trading system or for data or text mining.

The client agrees not to rearrange or modify the Content available through the Website. The client agrees not to display, post, frame, or scrape the Content for use on another website, app, blog, product or service, except as otherwise expressly permitted by these Terms. You agree not to create any derivative work based on or containing the research products and Content. The framing or scraping of or in-line linking to the Services or any Content contained thereon and/or the use of webcrawler, spidering or other automated means to access, copy, index, process and/or store any Content made available on or through the Services other than as expressly authorized by us is prohibited.

The client further agrees to abide by exclusionary protocols (e.g., Robots.txt, Automated Content Access Protocol (ACAP), etc.) that may be used in connection with the Research Services. The client may not access parts of the Research Services to which he/she is not authorized, or attempt to circumvent any restrictions imposed on your use or access of the Services.

As a general rule, the client may not use the Content, including without limitation, any Content made available through one of our RSS Feeds, in any commercial product or service, without our express written consent.

The client may not create apps, extensions, or other products and services that use our Content without our permission. The client may not aggregate or otherwise use our Content in a manner that could reasonably serve as a substitute for a subscription to the Website.

The client may not access or view the Services with the use of any scripts, extensions, or programs that alter the way the Services are displayed, rendered, or transmitted to you without our written consent.

The client agrees not to use the Services for any unlawful purpose. We reserve the right to terminate or restrict the client's access to the Website if, in our opinion, the client's use of the Services may violate any laws, regulations or rulings, infringe upon another person's rights or violate these Terms.

Prohibited content: The Website includes comments sections, blogs and other interactive features that allow interaction among clients and between clients and the RA. We call the information posted by or contributed by users “Contributed Content.” In the course of availing of the Research Services or uploading any post or comment on the Website, the client shall not post any Contributed Content that (i) contains nude, semi-nude, sexually suggestive photos, (ii) tends or is likely to abuse, harass, threaten, impersonate or intimidate other users of the Website and/or Research Services, (iii) is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely to use or have access to the Website and/or Services, or (iv) otherwise violates, is prohibited or restricted by applicable law, rule or regulation, is offensive or illegal or violates the rights of, harms or threatens the safety of other users of the Website and/or Services (collectively “Prohibited Content”).

We reserve the right to cease to provide the client with the Research Services or access to the Website, or terminate your subscription, with immediate effect and without notice and liability, for violating these Terms, applicable law, rules or regulations and reserves the right to remove Prohibited Content which is in violation of these Terms, or is otherwise abusive, illegal or disruptive. The determination of whether any content constitutes Prohibited Content, violates these Terms, or is otherwise abusive illegal or disruptive, is subject to the sole determination of the Firm.

Changes to Research Services: We are constantly endeavouring to improve the quality of Research Services provided to our clients. Due to this, the form and nature of the Research Services provided may change from time to time without any prior notice to the client. We reserve the right to introduce and initiate new features, functionalities, components to the Website and/or Research Services and/or change, alter, modify, or discontinue existing ones without any prior notice to the client.

Warranty and liability disclaimer: The Website, Research Services, and all the materials and services, included on or otherwise made available to the client through this Website is provided by the RA on an “as is” and “as available” basis without any representation or warranties, express or implied except otherwise specified in writing. Without prejudice to the foregoing paragraph, the RA does not warrant that:

  • This Website and/or Research Services will be constantly available, or available at all;
  • The information on this Website or provided through the Research Services is complete, true, accurate or not misleading; or
  • The quality of any products, services, information, or other material that you obtain through the Website or Services will meet your expectations.

The RA, to the fullest extent permitted by law, disclaims all warranties, whether express or implied, including the warranty of merchantability, fitness for particular purpose and non-infringement. The RA makes no warranties about the accuracy, reliability, completeness, or timeliness of the Website, Research Services, Content, Contributed Content, Services, software, text, graphics and links.

The RA does not warrant that this Website, Research Services, information, content, materials, or any other material included on or otherwise made available to you through this Website, their servers, or electronic communication sent by the RA are free of viruses or other harmful components.

Nothing on this Website constitutes, or is meant to constitute, advice of any kind.

Indemnification: The client:

  1. Represents, warrants and covenants that no materials of any kind provided by him/her will:
    1. Violate, plagiarise, or infringe upon the rights of any third party, including copyright, trademark, privacy or other personal or proprietary rights; or
    2. Contain libellous, Prohibited Content or other unlawful material;
  2. Hereby agree to indemnify, defend and hold harmless the RA and all of the RA’s officers, directors, owners, agents, customers/clients, information providers, affiliates, licensors and licensees (collectively, the “Indemnified Parties”) from and against any and all liability and costs, including, without limitation, reasonable advocate’s fees, incurred by the Indemnified Parties in connection with any claim arising out of any breach by the client of these Terms or the foregoing representations, warranties and covenants. The client shall cooperate as fully as reasonably required in the defence of any such claim. The RA reserves the right, at its own expense, to assume the exclusive defence and control of any matter subject to indemnification by the client.

Applicable law: This Website, including the Content and Contributed Content and information contained herein, and the provision of Research Services shall be governed by the Securities and Exchange Board of India, laws of the Republic of India and the courts of Chennai, India which shall retain exclusive jurisdiction to entertain any proceedings in relation to any disputes arising out of the same. As such, the laws of India shall govern any transaction completed using this Website.

Information gathered and tracked: Information submitted or collected on the Website or pursuant to the use of the Services is stored in a database. Specifically, we store the username, name, e-mail address, contact number, as submitted or collected on our Website or through the provision of the Research Services. We may use such information to send out occasional promotional materials, including alerts on new Services available, or other promotional and marketing material relating to our clients and customers.

In accordance with the Information Technology Act 2000, the name and the details of the Grievance Officer at PrimeInvestor is provided below:

Mr. Srikanth Meenakshi
PrimeInvestor Financial Research Pvt. Ltd., Registered office: 659, 4th Avenue, D-Sector, Anna Nagar Western Extension, Chennai 600 101.
Email: [email protected]

11. Mandatory notice:

Clients shall be requested to go through Do’s and Don’ts while dealing with RA as specified in SEBI master circular no. SEBI/HO/MIRSD-POD-1/P/CIR/2024/49 dated May 21, 2024 or as may be specified by SEBI from time to time.

12. Optional Centralised Fee Collection Mechanism:

SEBI has operationalized a centralized fee collection mechanism for IA and RA. Under this mechanism, clients shall pay fees to IAs/RAs through a designated platform/portal administered by a recognized Administration and Supervision body. This is an optional mechanism for the registered entities. At this time, PrimeInvestor has opted out of this fee collection mechanism. Therefore, all subscription payments for the Research Services will be through the modes as specified in Clause 5 of these Terms.

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