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Fintech major PhonePe has rolled out a Loans against Mutual Funds (LAMF) product on its platform in partnership with DSP Finance, a non-banking financial company backed by the DSP Group.
The product offers users a secured credit limit of up to Rs 2 crore. Customers are required to pledge their mutual fund units as collateral. Their portfolios remain invested, and systematic investment plans (SIPs) can continue without interruption.
“They can use this as a credit line, repaying the principal anytime and withdrawing again whenever needed,” PhonePe said.
Unlike traditional loans, there are no monthly principal repayments or equated monthly instalments (EMIs), since users only need to pay interest on the amount they withdraw, it added.
“By turning mutual funds into a source of liquidity, we are building a more inclusive financial ecosystem where our users can meet their aspirations without compromising on their long-term wealth creation journey,” said Hemant Gala, chief executive officer, PhonePe Lending.
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Users must complete the Know Your Customer (KYC) process before availing themselves of the product.
PhonePe has more than 640 million registered users and over 45 million registered merchants.
“With Loans against Mutual Funds, customers can now access instant liquidity while continuing to benefit from the growth of their portfolios. This product is designed to give them control, convenience and confidence in managing both short-term needs and long-term aspirations,” said Jayesh Mehta, chief executive officer, DSP Finance.
At present, PhonePe’s portfolio includes the distribution of financial products such as insurance, lending and wealth, alongside consumer tech businesses like the hyperlocal e-commerce platform Pincode and the Indus AppStore.
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