You can now use your mutual funds to make UPI payments instantly! Thanks to a new feature called “Pay with Mutual Fund,” investors can pay directly from their liquid fund holdings.
The money is automatically redeemed from your fund and transferred via UPI within seconds.
This feature is already live with ICICI Prudential Mutual Fund and Bajaj Finserv AMC, in partnership with Curie Money.
In simple terms, your liquid mutual fund now works like a bank account—but with the added advantage of potentially higher returns.
Why This Feature is a Game-Changer
Instant Access to Cash
Liquid mutual funds already invest in short-term, low-risk instruments, which makes them very flexible.
With this new feature, you can pay directly from your fund—no need to redeem money first or wait for it to reach your bank account.
Better Returns Than Savings Accounts
While savings accounts usually give less than 4% interest, liquid funds can offer up to 7% returns, depending on market conditions.
That means your idle money could actually earn more while staying easily accessible.
UPI Convenience
We all use UPI for daily transactions.
Now, instead of transferring money from your mutual fund to your bank and then paying, you can pay directly—quick, simple, and seamless.
Smarter Cash Management
For both individuals and businesses, this feature helps in managing short-term funds more efficiently.
You can keep your money invested in a liquid fund and still use it whenever needed.
Should You Replace Your Savings Account?
Not entirely.
A savings account is still safer—deposits are insured up to ₹5 lakh, and returns are predictable.
A liquid fund, though low-risk, is still market-linked and not guaranteed.
If you’re okay with minimal risk and want your money to grow a bit more while staying accessible, this feature is worth trying.
Just ensure the mutual fund you choose has strong liquidity and smooth redemption processing.
What to Keep in Mind
Check Fund Performance: Look at average returns and redemption conditions.
Even “instant” payments might have small time limits or cut-offs.
Understand Taxes: Frequent redemptions mean short-term capital gains, which are taxed as per your income slab.
Higher earners could pay more in taxes.
Stay Disciplined: Don’t treat your liquid fund as your only emergency cash.
Keep some savings in your bank for true emergencies.
Bottom Line
“Pay with Mutual Fund” is a smart innovation that brings together investment and convenience.
For those who keep extra cash sitting idle in savings accounts, this could be a powerful alternative—just be sure you understand how it works and manage it wisely.
