Bootstrapped instant online lending platform Phocket provides short-term loans of up to Rs 1 lakh to salaried professionals at a flat interest rate of 2.5 percent per month.
Personal loans have become crucial for salaried people, who often fall out of the budget by the end of the month due to multiple reasons. While securing a bank loan has become a cumbersome process, digital lending has come to the rescue as digital lending platforms also provide easier credit access to individuals.
Taking a cue from 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 salaried employees. The startup’s vision is to “provide 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 over its mobile app for a duration of anywhere between 7 to 45 days. The company charges a flat interest rate of 2.5 percent per month, which comes to as low as Rs 9, depending on the amount borrowed.
The end-to-end process takes not more than two hours to get the money in the bank account. Co-founder and CEO Sumit says, "Phocket users are taking loans for urgent purchases, marriage expenses, travel plans, hotel bookings, medical emergency, among other stretched budgets of unexpected expenses."
The lending industry in India has also seen the entry of fintech major Paytm, as well as Mobikwik, along with many other P2P lending platforms like Lendingkart, Cashkumar, Moneytap, Faircent, Paysense, Cashe amongst others.
However, the co-founders - Sumit Jain (CEO), Piyush Jain (COO), and Mohit Bansal (CTO) - are confident to cruise through the jam-packed P2P lending space in India.
“Our USP is our unique customer acquisition and engagement strategy, which is onboarding and verifying users via an Ambassador Program,” says Sumit.
Interestingly, Piyush Jain is a Chartered Accountant and has experience working in credit appraisal, lending, legal compliance and fundraising, with firms like EY, Goldman Sachs, and Flipkart. Sumit comes with 15 years of experience in IT consulting, sales and marketing, and product management with companies like Infosys, RBS, Philips, SAP, and Gartner. Mohit, who takes care of technology at Phocket, is an NSIT graduate and has IT and product development experience with expertise in microservice architecture, database design, artificial intelligence and machine learning.
Phocket goes LIC way
Phocket’s Ambassador Program is very similar to an LIC agent model where an ambassador advocates and promotes Phocket within his/her network using different channels like social media, personal connections or through word of mouth.
“They ambassadors can have non-stop earning,” says Sumit. An ambassador gets a commission of Rs 50 on every completed application and 20 percent commission from the processing fee on each successful processed application.
“A person normally takes loan multiple times. The ambassador will earn commission on all the successful processed application and not just the first one. And this will continue forever,” Sumit adds. He also says that 81 percent of them are repeat users.
The programme is ideal for students, homemakers, blue-collar workers, and for those who prefer to work from home or part-time.
Sumit says that the ones who are a part of the ambassador program include office boys, tea stall owners, parking staff, admin staff and even team leads at prominent BPOs in the 25-45 year age group. “People with not very high monthly income are in majority,” says Sumit.
For instance, 29-year-old Tinku Chauhan, an office boy working for a construction firm in Delhi, has generated 50 successful leads and has earned Rs 10,000 since he on-boarded.
Through this programme, Phocket is able to address challenges of KYC post Supreme Court verdict late last year on Aadhaar, which disallowed eKYC using Aadhaar. “We have been able to streamline and sort the KYC process using our ambassadors,” says Sumit.
How does the app work?
A Phocket user is required to fill a loan application online, and will have to upload the necessary documents such as a government ID proof. The Phocket app will then do an internal credit check to let the user know with an hour or a maximum of 24 hours if they are eligible to avail the loan.
For user verification, Sumit says, for first-time approval, Phocket will have a necessary physical verification process. “Our field executive will visit the applicant for completing loan formalities. The applicant needs to sign the loan agreement, NACH mandate form and give a security cheque from salary account. Once the formalities are completed, disbursement will happen the same day. For subsequent approvals, the process is fully-automated and disbursement will happen 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 gives loans to individuals who earn Rs 15,000 or more per month. Sumit says, unlike banks and other lending platforms, Phocket does not require high CIBIL score.
“Usually, other lenders need CIBIL score of 750 or above, but we have given loans to users with a CIBIL score of 450 or even below.”
The startup is currently operating this model in Delhi NCR and soon plans to roll out the programme across India. The company has on-boarded about 40 such ambassadors, and the number is growing every month, says Sumit.
P2P lending industry
P2P lending platforms and service providers have been in India since 2014, but it got regulated only in September 2017, when the Reserve Bank of India (RBI) notified that lending platforms will come under the purview of the government, and will be registered as non-banking financial companies (NBFCs). A month later, the central bank also issued a set of guidelines to operate an NBFC in India.
So far, there are about a dozen registered NBFCs in India, and almost every quarter the RBI updates the list. Phocket has collaborated with DRP Financial Services Pvt Ltd, an NBFC with the licence to carry out lending activities from the RBI.
According to a PwC report, the size of the P2P lending market in India is estimated to be around $4 billion in five years, which would be about 160 times the current lending size.
Phocket disbursed 2,800 loans worth Rs 4 crore by the end of December 2018, and is now looking to grow its loan book to Rs 1,000 crore by 2020 with 200,000 customers, says Sumit.
The startup aims to create ‘Phocket 360’ by 2020, which will be an AI-enabled Money Management platform, which will enable users to pay bills, track expense, set budgets, track transactions, and help with automatic loan disbursal among other fintech features.
“By 2020, Phocket will be operational throughout India, and our USP and efforts to synergise offline and online presence will play a crucial role in the expansion and to achieve our goal,” says Sumit.
The startup also plans to onboard investors to finance its loan book, grow its team, and invest in brand building. While the co-founder did not share the size and timeline of the investment, he said: “Phocket has been bootstrapped by the three co-founders and is sufficiently funded. We wish to engage with a good early stage VC with a strong focus on fintech domain who can take us to the next level.”