How about taking a personal loan of 5 Lacs @15% and invest in mutual funds

It is not a good idea at all to take a personal loan @15% and invest in mutual funds. Please note that mutual funds or equity oriented investments carry market risks and returns are not assured. Also, if you are investing in equity mutual funds then the minimum investment horizon should be of 5 years atleast.

However, the most important point to note here is that legally you can not use the personal loan amount for any speculative or market linked investments. Most of the personal loan providers including banks define that end use of the personal loan can be house renovation, holidays, purchase of consumer durables, education, marriage, short term loan for equipment purchase, short term working Capital, any other personal emergency requirements of the customers and their families.