PhonePe and DSP Finance Launch Loans Against Mutual Funds up to ₹2 Crore

PhonePe has partnered with DSP Finance to launch a new Loans Against Mutual Funds (LAMF) product, allowing users to leverage their mutual fund portfolios as collateral for secured credit lines. With credit limits up to ₹2 crore, this service provides flexibility, enabling users to maintain their investments while accessing liquidity.

What is Loans Against Mutual Funds (LAMF)?

Loans Against Mutual Funds (LAMF) allow users to pledge their mutual fund units as collateral to avail themselves of secured credit. The product offers a credit line of up to ₹2 crore, enabling users to meet short-term financial needs without having to sell off their investments. 

Unlike traditional loans, users only pay interest on the amount withdrawn, and there are no monthly principal repayments or EMIs, giving them more flexibility in managing their finances.

Key Features of PhonePe's LAMF Product

• Credit Limit: Loans up to ₹2 crore, secured by mutual fund investments.
• Flexibility: No monthly EMI or principal repayment obligations. Only pay interest on the withdrawn amount.
• Portfolio Continuity: Your mutual fund investments remain intact, and systematic investment plans (SIPs) can continue without interruption.
• Instant Liquidity: Access quick credit without selling your mutual fund units, enabling easy cash flow management.

How It Works

Users can easily avail themselves of a loan by completing the Know Your Customer (KYC) process on the PhonePe platform. Once verified, they can pledge their mutual fund units to secure a loan. The product allows borrowers to use the loan as a flexible credit line, repaying the principal anytime and reusing the credit whenever necessary. This process is completely digital, offering a seamless experience for the users.

Read More: What is MF Lite Framework for Passive Funds?

Benefits of Loans Against Mutual Funds

PhonePe’s Loans Against Mutual Funds provide an innovative way for users to meet immediate financial requirements without liquidating their long-term investments. The major benefits include:

• Continued Portfolio Growth: Your mutual funds remain invested, allowing you to continue benefiting from portfolio growth.
• No Interruption in SIPs: Systematic Investment Plans (SIPs) can continue, allowing for uninterrupted wealth creation.
• Quick Access to Funds: Get instant liquidity without selling off your mutual funds.
• Flexible Repayments: Users can repay the loan principal at any time and withdraw again when necessary.

Comments from Executives

As per news reports, Hemant Gala, CEO of PhonePe Lending, commented, "By turning mutual funds into a source of liquidity, we are building a more inclusive financial ecosystem, helping users meet their needs without compromising their long-term wealth creation goals."

Jayesh Mehta, CEO of DSP Finance, added, "This product provides customers with instant liquidity while allowing them to continue benefiting from the growth of their portfolios. It’s designed to offer control, convenience, and confidence in managing both short-term needs and long-term aspirations."

Conclusion

PhonePe’s collaboration with DSP Finance offers a game-changing financial product for mutual fund investors. The Loans Against Mutual Funds (LAMF) product allows users to access substantial credit while maintaining their long-term wealth creation journey. This innovation not only provides instant liquidity but also enhances the flexibility and control users have over their financial needs.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.