Fintech companies in India are increasingly venturing into secured lending, with loans against mutual funds (LAMFs) emerging as the latest offering. Having already built a presence in gold loans and property-backed credit, fintechs are now leveraging advanced technology stacks to make mutual fund–backed credit a seamless experience for users.
The rise of LAMFs is enabled by the fully digital nature of securities in India. What once took several days or even weeks to process can now be completed in real time, thanks to in-house digital infrastructure and integrations with depositories and asset management systems. This technological shift is helping fintechs deliver instant loan disbursals, thereby addressing both convenience and speed — two critical factors for borrowers.
With LAMFs, users can pledge their mutual fund holdings as collateral to access quick credit while continuing to stay invested. This dual benefit ensures that investors do not need to liquidate their portfolios or disrupt systematic investment plans (SIPs), thus maintaining long-term wealth creation strategies while meeting short-term liquidity needs.
Industry experts highlight that the rapid pace of innovation over the past year has been central to this transformation. By deploying digital verification, real-time lien marking, and automated underwriting processes, fintechs are bridging the gap between investment management and consumer credit.
As competition intensifies in the secured lending space, loans against mutual funds are expected to become a mainstream product. For borrowers, they represent a smarter alternative to traditional credit, combining speed, security, and financial continuity.
