Loans Against Mutual Funds : PhonePe, one of India’s leading fintech platforms, has partnered with DSP Finance to launch an innovative Loans Against Mutual Funds (LAMF) product. This new offering allows users to unlock liquidity from their existing mutual fund investments, providing secured credit lines of up to Rs 2 crore. The initiative is designed to give customers flexibility, control, and uninterrupted growth of their investment portfolios.
With this new product, mutual fund investors no longer need to liquidate their holdings to meet short-term financial requirements. Instead, they can pledge their mutual fund units as collateral and continue investing via systematic investment plans (SIPs). This ensures that their long-term wealth creation journey remains uninterrupted while they access instant liquidity.
The LAMF product is part of PhonePe’s broader push into financial services, alongside offerings in insurance, lending, and wealth management. With over 640 million registered users and a presence across more than 45 million merchants, PhonePe continues to expand its ecosystem, making financial tools more accessible and inclusive for Indian consumers.
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How Loans Against Mutual Funds Work
Secured Credit Line Using Mutual Funds
Under this new offering, users can avail a credit limit of up to Rs 2 crore by pledging their mutual fund holdings. The pledged units remain invested, ensuring the investor continues to benefit from market growth. Customers can use this as a revolving credit line, repaying the principal at any time and withdrawing funds as needed.
No EMIs, Only Interest on Withdrawals
Unlike traditional loans, there are no monthly principal repayments or EMIs. Borrowers only pay interest on the portion of the credit line they use, giving them greater flexibility in managing cash flows. This makes LAMF a convenient solution for short-term liquidity needs without disrupting long-term investments.
Continuity of Systematic Investment Plans (SIPs)
One of the standout features of this product is that SIPs can continue uninterrupted. Investors don’t have to redeem their mutual funds to access funds, allowing them to maintain their disciplined investment strategy while addressing immediate financial requirements.
Benefits of PhonePe’s LAMF Product
Instant Liquidity
This product enables investors to convert part of their mutual fund portfolio into instant cash. Whether it’s for emergencies, business needs, or personal expenses, customers can access funds quickly without selling investments.
Flexibility and Control
Users have full control over their credit lines, with the freedom to withdraw and repay funds as per their needs. This flexibility enhances financial management capabilities and reduces dependency on traditional loan products.
Inclusive Financial Ecosystem
PhonePe aims to build a more inclusive financial ecosystem. By offering loans against mutual funds, users can meet short-term aspirations while continuing to grow their long-term wealth. Hemant Gala, CEO of PhonePe Lending, stated:
Seamless Onboarding with KYC
To avail the LAMF product, users must complete the Know Your Customer (KYC) process, ensuring secure and compliant transactions. This simplifies the onboarding process while adhering to regulatory requirements.
About PhonePe and DSP Finance
PhonePe has rapidly expanded beyond payments and consumer technology to offer a wide range of financial services, including insurance, lending, and wealth management. The platform also features a hyperlocal e-commerce marketplace, Pincode, and the Indus AppStore, demonstrating its commitment to building a diverse digital ecosystem.
DSP Finance, backed by the DSP Group, specializes in lending products designed to empower individuals and businesses. By partnering with PhonePe, DSP Finance leverages the fintech giant’s extensive user base to provide innovative credit solutions like LAMF, blending convenience with financial prudence.
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Conclusion
PhonePe and DSP Finance’s Loans Against Mutual Funds product represents a significant step in democratizing access to credit in India. By leveraging existing investments, customers can meet short-term liquidity needs without disrupting long-term financial goals.
The product’s flexible repayment options and revolving credit structure make it an attractive alternative to traditional loans, offering greater control over cash flow management. With no EMIs and only interest charged on withdrawn amounts, users enjoy a simplified borrowing experience.
Furthermore, the continuity of SIPs ensures disciplined wealth creation, allowing investors to maintain long-term growth strategies while accessing instant funds. This combination of flexibility and portfolio continuity positions LAMF as a game-changing financial solution.
By integrating LAMF into its broader financial ecosystem, PhonePe continues to empower millions of users with innovative tools to manage both short-term needs and long-term aspirations. The partnership with DSP Finance highlights a shared vision of creating an inclusive, accessible, and convenient financial landscape for all Indians.
FAQs About Loans Against Mutual Funds
1. What is a Loan Against Mutual Funds (LAMF)?
A Loan Against Mutual Funds (LAMF) is a credit facility where investors pledge their mutual fund units as collateral to access a secured line of credit. Unlike traditional loans, the pledged units continue to remain invested, allowing SIPs to continue uninterrupted. Borrowers pay interest only on the amount they withdraw.
2. How much can I borrow through PhonePe’s LAMF product?
PhonePe, in partnership with DSP Finance, allows users to access up to Rs 2 crore in credit. The exact limit depends on the value of the mutual fund units pledged and the type of funds held.
3. Do I have to make monthly principal repayments?
No. Unlike conventional loans, PhonePe’s LAMF does not require EMIs or monthly principal repayments. Customers only pay interest on the portion of the credit line they utilize, offering flexibility and reducing financial burden.
4. Can I continue my SIPs while using LAMF?
Yes. One of the key benefits of this product is that systematic investment plans (SIPs) continue uninterrupted. Investors can access liquidity without selling their mutual fund units, maintaining long-term investment growth.
5. Who is eligible to apply for Loans Against Mutual Funds on PhonePe?
To avail LAMF, users must complete the KYC process. The product is aimed at investors with mutual fund holdings who wish to access short-term liquidity without disrupting their portfolios. Eligibility and loan limits are determined based on the value of the pledged funds and the customer’s profile.