Meet the fintechs paving the way for lending against securities


Vidhya Sivaramakrishnan

18 reads

Vidhya Sivaramakrishnan

18 reads

As more Indians, especially millennials and Gen Z, take to investing in stocks and mutual funds, a clutch of fintech startups is betting the house on lending against these investments. The nascent and low-margin lending against securities play, though, comes with its fair share of challenges.

October 11, 2023


Key Takeaways

  • In the last few years, retail participation in the Indian securities market has increased
  • While physical assets still rule, the ideas of wealth creation and retiring rich are prompting many, especially younger Indians, to invest in mutual funds and stocks
  • A crop of fintech startups are betting big on this trend and believe that lending against such investments is a win-win for all stakeholders
  • These fintechs are now bringing lending against securities—previously the sole domain of the ultra-rich—to India’s masses

A decade ago, two college mates at Vellore Institute of Technology—Shreyans Nahar and Mridul Manhas—grew curious about how much wealth the world owns, who owns it, and in what forms it is held. India, of course, was a special point of fascination for the duo.

The more they dug, the more they realised how the concentration of wealth was shifting. Consumers were increasingly moving from just traditional physical assets—like, say, property or gold—to securities like stocks and mutual funds as they sought not just to hold their wealth but to actively grow it.

While India was something of a laggard in this regard, the country has seen this trend accelerate in recent years. Over 100 million Indians now have dematerialised, or demat, accounts, which enable the holding of investments including shares, mutual funds, bonds, government securities and insurance without the need for any paperwork.

The rise of discount broking platforms like Zerodha and Groww—both of which have north of six million active clients—and are now leaders in their space is further testament to Indians’ increased fascination with securities.

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