PhonePe now lets you avail loans against mutual fund investments
What's the story
Leading Indian fintech company PhonePe has launched a new feature, allowing its users to take loans against their mutual fund investments. The service is available in collaboration with DSP Finance, a tech-driven non-banking financial company (NBFC). The innovative solution is called Loans Against Mutual Funds (LAMF), and it enables investors to use their mutual fund holdings as collateral for loans.
Loan details
Instant loans without redeeming investments
The LAMF product provides a seamless way for PhonePe users to access funds. They can borrow as much as ₹2 crore in less than 10 minutes, without having to redeem their mutual fund investments. The loan amount is credited directly into the user's bank account after they digitally sign the loan agreement. Hemant Gala, CEO of PhonePe Lending, emphasized that this new offering gives secured credit access while keeping their investments intact.
Repayment terms
Flexible repayment terms for borrowers
The LAMF product comes with flexible repayment terms. Borrowers only have to pay interest on the amount withdrawn, with no monthly principal repayments or EMIs. The principal can be repaid anytime after which the credit line can be reused. This feature is designed to offer liquidity while keeping mutual fund investments active, Jayesh Mehta, CEO of DSP Finance, said.
User experience
How to avail of LAMF on PhonePe
The entire loan process, from onboarding to disbursement, repayment, and closure, is handled within the PhonePe app. To avail of the loan, users have to open the 'Loan Against Mutual Fund' option in the 'Loans' section on their PhonePe app. They then enter their PAN and OTP for eligibility check before selecting their desired loan amount from a generated offer based on eligible mutual funds.
Company profile
PhonePe's journey and services
Founded in India, PhonePe has a user base of over 640 million and a digital payments network spanning 45 million merchants. The company offers a range of services including digital payments, financial product distribution, and technology-based consumer services. With the launch of LAMF, PhonePe is further strengthening its position as a comprehensive financial service provider in the Indian market.