Primed instant online lending platform Phocket is offering short-term loans of up to Rs 1 lakh to salaried professionals at a fixed interest rate of 2.5% per month.
Personal loans have become crucial for employees, who often go out of budget at the end of the month for multiple reasons. While getting a bank loan has become a tedious process, digital lending has come to the rescue as digital lending platforms also provide easier access to credit for individuals.
Inspired by this, Sumit Jain, Piyush Jain and Mohit Bansal, who were brainstorming their ideas to stand out in the crowded lending space in India, decided to launch an instant lending platform. The trio launched Phocket in July 2018 to provide short-term personal loans to employees. The startup’s vision is to “deliver cash in your pocket at the speed of a rocket”.
Delhi-based Phocket offers instant short-term loans ranging from Rs 5,000 to Rs 1,00,000 on its mobile app for a term of between 7 and 45 days. The company charges a fixed interest rate of 2.5% per month, which reaches as low as 9 rupees, depending on the amount borrowed.
The end-to-end process takes no more than two hours to get the money into the bank account. Co-founder and CEO Sumit said, “Phocket users take out loans for emergency purchases, wedding expenses, travel plans, hotel reservations, medical emergencies, among other tight budgets of unexpected expenses. .”
The lending industry in India has also seen the entry of fintech major Paytm, along with Mobikwik, along with many other P2P lending platforms like Lendingkart, Cashkumar, Moneytap, Faircent, Paysense, Cashe, among others.
However, the co-founders – Sumit Jain (CEO), Piyush Jain (COO) and Mohit Bansal (CTO) – are confident to navigate the crowded P2P lending space in India.
“Our USP is our unique customer acquisition and engagement strategy, which involves onboarding and verifying users through an ambassador program,” Sumit says.
Interestingly, Piyush Jain is a Chartered Accountant and has work experience in credit reporting, lending, legal compliance and fundraising, with companies like EY, Goldman Sachs and Flipkart. Sumit has 15 years of experience in IT consulting, sales and marketing and product management with companies like Infosys, RBS, Philips, SAP and Gartner. Mohit, who looks after technology at Phocket, is an NSIT graduate and has a background in IT and product development with expertise in microservices architecture, database design, artificial intelligence and machine learning.
Phocket switches to LIC
The Phocket Ambassador Program is very similar to an LIC Agent model where an Ambassador champions and promotes Phocket within their network using different channels like social media, personal connections, or word of mouth.
“They ambassadors can have non-stop income,” says Sumit. An Ambassador receives a commission of Rs 50 on each completed application and a 20% commission on the processing fee of each successfully processed application.
“A person normally takes out a loan several times. The Ambassador will earn a commission on all successfully processed applications, not just the first one. And it will continue forever,” adds Sumit. It also says that 81% of them are regular users.
The program is ideal for students, housewives, blue collar workers and for those who prefer to work from home or part-time.
Sumit says those in the ambassador program include office boys, tea stall owners, parking lot staff, administrative staff and even team leaders of major BPOs in the age bracket of 25 to 45 years old. “People with low monthly incomes are in the majority,” says Sumit.
For example, 29-year-old Tinku Chauhan, an office boy working for a construction company in Delhi, has generated 50 successful leads and earned Rs 10,000 since his arrival.
Through this program, Phocket is able to meet KYC challenges after the Supreme Court verdict late last year on Aadhaar, which banned eKYC using Aadhaar. “We were able to streamline and sort out the KYC process using our ambassadors,” says Sumit.
How does the app work?
A Phocket user is required to complete an online loan application and will need to upload necessary documents such as government ID proof. The Phocket app will then perform an internal credit check to notify the user within an hour or a maximum of 24 hours if they are eligible to avail the loan.
For user verification, Sumit says, for the first approval, Phocket will have a necessary physical verification process. “Our field officer will visit the applicant to complete the loan formalities. The applicant must sign the loan agreement, the NACH mandate form and give a security check from the salary account. Once the formalities have been completed, the disbursement will take place the same day. For subsequent approvals, the process is fully automated and disbursement will occur within 24 hours. Finally, the loan will be directly transferred to the bank account within the next 10 minutes,” says Sumit.
As of now, the company provides loans to people who earn Rs 15,000 or more per month. Sumit says that unlike banks and other lending platforms, Phocket does not require a high CIBIL score.
“Usually other lenders require a CIBIL score of 750 or higher, but we have granted loans to users with a CIBIL score of 450 or even lower.”
The startup is currently operating this model in NCR Delhi and soon plans to roll out the program across India. The company has onboarded about 40 such ambassadors, and the number is growing every month, Sumit says.
P2P lending industry
P2P lending platforms and service providers have been in India since 2014, but they were not regulated until September 2017 when the Reserve Bank of India (RBI) notified that lending platforms would come under within the jurisdiction of the government and would be recorded as no. – banking financial companies (NBFC). A month later, the central bank also issued a set of guidelines for operating an NBFC in India.
So far, there are around a dozen NBFCs registered in India, and almost every quarter, the RBI updates the list. Phocket has collaborated with DRP Financial Services Pvt Ltd, an NBFC with the license to conduct lending business from the RBI.
According to a PwC report, the size of the P2P lending market in India is estimated to be around $4 billion over five years, or about 160 times the current lending size.
road ahead
Phocket disbursed 2,800 loans worth Rs 4 crore at the end of December 2018 and is now looking to grow its loan portfolio to Rs 1,000 crore by 2020 with 200,000 clients, says Sumit.
The startup aims to create “Phocket 360” by 2020, which will be an AI-powered money management platform, which will allow users to pay bills, track expenses, set budgets, track transactions, and assist with automatic loan disbursement, among other fintech features. .
“By 2020, Phocket will be operational across India, and our USP and efforts to synergize offline and online presence will play a crucial role in expanding and achieving our goal,” Sumit says.
The startup also plans to onboard investors to fund its loan portfolio, grow its team, and invest in building the brand. Although the co-founder did not share the size and timing of the investment, he said, “Phocket was started by all three co-founders and is well funded. We want to engage with good early-stage venture capital with a strong focus on the fintech space that can take us to the next level.
