FinEzzy has set its sights on an ambitious goal to disburse around Rs 1,500 crore in loans against mutual funds over the next year. This announcement comes as FinEzzy launched its mobile app that allows individual investors to obtain loans against their mutual fund portfolio. 

FinEzzy’s marketplace model brings multiple lenders onto a single platform, empowering users to negotiate and secure the most favourable loan terms. The fintech claimed that it creates a transparent and competitive lending environment that puts the power back into the hands of individual investors.

It utilises one-time-password (OTP) based consent to securely fetch holdings from Registrar and Transfer Agents (RTAs) and retrieve necessary documents from government repositories for Know Your Customer (KYC) compliance.

According to the Association of Mutual Funds in India, Assets Under Management (AUM) of the country’s mutual fund industry stood at Rs 43,20,468 crore on May 31, 2023. This is up from Rs 22.60 trillion on May 31, 2018, which underlines that customers consider mutual funds as viable investment instruments.

By pledging their mutual fund units as collateral, customers do not need to liquidate their holdings and lose their long-term benefits. They can instead use the growing number of digital platforms that give them an alternative to meet their short-term liquidity needs. These apps allow users to complete their loan application process in under 15 minutes, eliminating the hassles of mammoth paperwork. This was a key reason many stayed away from opting for this alternative. 

In April 2023, Geojit Credits, a non-banking financial company (NBFC), launched the Loan Against Mutual Fund (LAMF) scheme, allowing investors to avail of loans starting from Rs 10,000 in digital mode. Last month, another NBFC, Mirae Asset Financial Services (India) partnered with FundsIndia to provide loans against securities on the latter’s digital platform.

In addition to its offering for individual investors, FinEzzy has introduced a proposition for Independent Financial Advisors (IFAs) and Mutual Fund Distributors (MFDs). These professionals can now extend the loan against mutual funds feature to their clients, allowing them to retain their AUM while offering auto-redemption insurance that complements their existing practices.