{"id":17390,"date":"2025-09-09T13:31:53","date_gmt":"2025-09-09T08:01:53","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=17390"},"modified":"2025-09-09T13:34:45","modified_gmt":"2025-09-09T08:04:45","slug":"loan-against-mutual-funds-credit-limit-overutilised","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/loan-against-mutual-funds-credit-limit-overutilised\/","title":{"rendered":"Credit Limit Overutilised"},"content":{"rendered":"\n<p>The credit limit of your loan against <a href=\"https:\/\/www.tickertape.in\/blog\/mutual-funds\/\">mutual funds<\/a> or stocks may show as overutilised.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/loan-against-mutual-funds-credit-limit-overutilised\/#What-does-this-mean\" title=\"What does this mean?\">What does this mean?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/loan-against-mutual-funds-credit-limit-overutilised\/#Why-has-this-happened\" title=\"Why has this happened?\">Why has this happened?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/loan-against-mutual-funds-credit-limit-overutilised\/#What-should-you-do\" title=\"What should you do?\">What should you do?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/loan-against-mutual-funds-credit-limit-overutilised\/#What-if-you-dont-pay\" title=\"What if you don\u2019t pay?\">What if you don\u2019t pay?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What-does-this-mean\"><\/span>What does this mean?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Based on the <a href=\"https:\/\/www.tickertape.in\/blog\/market-value\/\">market value<\/a> of your mutual funds or stocks, every day the lender calculates your current credit limit (also known as drawing power)<br><br><em>Let\u2019s say you took the loan on the 1st Jan when the market value of your mutual funds or stocks was Rs 100 and your credit limit was Rs 45 (<a href=\"https:\/\/help.smallcase.com\/smallcasebp\/article\/ART-752-what-is-the-loantovalue-ltv-offered-against-the-stocks\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">LTV<\/a>&nbsp;at the time of taking the loan is considered as 45% for <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">equity<\/a>)<br>On the 2nd Jan the market value of your mutual funds or stocks becomes Rs 80, your updated credit limit will be Rs 40 (<a href=\"https:\/\/help.smallcase.com\/smallcasebp\/article\/ART-752-what-is-the-loantovalue-ltv-offered-against-the-stocks\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">LTV<\/a>&nbsp;after taking the loan is considered as 50% for equity)<\/em><\/li>\n\n\n\n<li>If the amount you\u2019ve withdrawn (also known as utilised credit limit or outstanding principal or loan amount) is higher than your current credit limit, then your credit limit is considered as&nbsp;<strong>overutilised<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why-has-this-happened\"><\/span>Why has this happened?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It usually happens due to 2 reasons:<\/p>\n\n\n\n<ul>\n<li>The market value of your pledged mutual funds or stocks may decrease.<\/li>\n\n\n\n<li>The lender\u2019s risk policy may change the list of eligible mutual funds or stocks, so some of your pledged mutual funds or stocks may become ineligible, leading to a drop in your current credit limit.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What-should-you-do\"><\/span>What should you do?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>As per the lender\u2019s policy, if your credit limit is overutilised for 7 consecutive days, you will receive a notification informing you about the same.<\/li>\n\n\n\n<li>Once you receive the notification, please repay the excess withdrawn amount (also referred to as the shortfall) immediately by repaying the principal amount. You can do this by visiting the&nbsp;<a href=\"https:\/\/smallcase.com\/loan-against-mutual-funds\/servicing\" target=\"_blank\" rel=\"noreferrer noopener\">credit page<\/a>&nbsp;on smallcase. Timely repayment will help prevent the lender from liquidating your investments to recover the amount.<\/li>\n\n\n\n<li>If you do not have the funds to repay, you may even pledge more mutual funds or stocks if available.<\/li>\n\n\n\n<li>Contact us if you have further queries<br><br><em>Let\u2019s say your current credit limit is Rs 40 and the amount you\u2019ve withdrawn (also known as utilised credit limit or outstanding principal or loan amount) is Rs 45.<br>Then the excess withdrawn amount (also known as the shortfall amount) is Rs 5<\/em><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What-if-you-dont-pay\"><\/span>What if you don\u2019t pay?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>The lender may sell your pledged mutual funds or stocks to recover the excess withdrawn amount (also known as the shortfall amount)<\/li>\n\n\n\n<li>For some reason, if the lender is unable to sell your pledged mutual funds or stocks to recover the amount, the lender may consider it a default and may try to recover it using the auto-debit bank mandate, may apply some additional charges and report to the credit bureau.<\/li>\n\n\n\n<li>We are here to make sure that your investments are protected and no unnecessary charges are applied.<\/li>\n\n\n\n<li>Contact us via email at\u00a0<a href=\"support@tickertape.in\" target=\"_blank\" data-type=\"link\" data-id=\"support@tickertape.in\" rel=\"noreferrer noopener\"><strong><a href=\"mailto:support@tickertape.in\" target=\"_blank\" rel=\"noreferrer noopener\">support@tickertape.in<\/a><\/strong><\/a>\u00a0or chat with our support team.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Understand what overutilised credit limit means in loans against mutual funds or stocks, why it happens, and how to manage it.<\/p>\n","protected":false},"author":131,"featured_media":17394,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[1],"tags":[],"acf":[],"modified_by":"Harshit Singh","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2025\/09\/LASLAMF-Blog-1.webp?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/17390"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/131"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=17390"}],"version-history":[{"count":5,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/17390\/revisions"}],"predecessor-version":[{"id":17398,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/17390\/revisions\/17398"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/17394"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=17390"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=17390"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=17390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}