23/04/2023
*** ALERT ***
IF YOU ARE A COMMON INDIAN MAN AND ALSO ONE OF USERS WHO IS EXPLORING MOBILE BASED MONEY LENDING, YOU NEED TO BE VERY CAUTIOUS ABOUT HOW MUCH YOU ARE PAYING OUT.
PLEASE READ TILL THE END AND ALSO FORWARD IT to EDUCATE YOUR NEARER AND DEARER ONES - FAMILY, RELATIVES, FRIENDS, COLLEAGUES, etc ***
*** To Maintain Confidentiality, we cannot disclose the details of people / individual who explored this on behalf. However, those details shall be shared with the concerned Financial Authorities of India (RBI / Finance Ministry / other authorized bodies) upon request. ***
YOU GOT TO TRUST THAT YOU ARE PAYING BACK a BOMB Amount against a sheer amount of even INR 1000/-
Of lately, we came across a typical Mobile based Money Lending App called mPokket via a common daily SMSes that everyone among us receives.
Wondering whether what would be the risk and why would these people lend money within just less than 12 hours, UNLIKE any other RBI licensed Bank who have a normal Banking process of 2 to 5 day disbursement in User's account.
We decided to download and explore the app and this is what we observed.
Loan Amount Requested = INR 1000/-
Tenure = 1 month
Break-up of Charges deduction from INR 1000/- is as below: -
Fees = INR 50/-
ACKO Insurance Premium = INR 6.8/-
GST (18%) = INR 10.2/-
Total Deductions in process = INR 67/-
Add Interest on top = INR 40/- (i.e. 4% of INR 1000/-)
Amount Received in Hand (Disbursed to Bank Account) = INR 933/- after above deductions. ACKO insurance which they have made mandatory even for a loan amount of INR 1000/-. This itself is unncessary burden levied as mandate if the requestor wants to avail loan from mPokket.
Total Amount Payable (end of month) = INR 1040/-
Effective Amount paid by Requestor = INR 67 + INR 40 = INR 107/- on a Borrowed amount of INR 1000/-
NET Effective % Paid to the lender = 10.7% per month which is far more higher than the Interest rates or % set by RBI
Are they here to help and enable common man in INDIA or they are here to exploit the needy to their best of abilities.
An above middle-class person in INDIA would not require to avail loan from these NBFC as they will have adequate liquidity sanctioned from an established BANK in INDIA (affiliated to RBI)
Its only common masses who are falling short of these privileges due to Bank norms and that is the reason they have to reach out to these private Lenders or NBFC's for their Financial Needs.
And this is what these NBFC'c like mPokket are doing with the common masses. Exploiting to the extremes by budreniing the commmon man with min. 10.7% on the borrowed amount.
Also, mPokket has a typical modus operandi.
- Send bulk SMS to lure the common man with a message saying "Pre-approved loan of up to INR 5 lakhs or even more." (different SMS messages reflecting different pre-approved amounts)
- Common man subscribes to their mobile app and these NBFC collect all the variety of documents (KYC, income, video KYC, consent to visit office for collection, consent to call family and friends for payment collection, etc)
- After process completion, an approval message is received. However, upon opening the mPokket app after all of above steps, the common man will see an approved Credit limit of INR 1000/- or INR 2000/-, inspite of all the valid documents and income proof submitted.
- an executive from mPokket will now call the target and inform verbally that although he/she has been approved for eligibility amount of say INR 35000/- (or they would say any higher amount also, just to trigger the need factor of the common man). The person will insist that due to glith in the application, the target will have to first request a loan from whatever the existing credit limit of INR 1000/- or INR 2000/-.
Once that request is processed, then the Credit limit will be enhanced to higher amounts , say for e.g. 35000/- or any xyz.
- Simply with the hopes to solve the personal family needs, the common man will pursue the route of requesting loan of INR 1000/- and that loan will be processed as per the breakup mentioned above. So with this transaction, the NBFC mPokket has already booked a monthly profit of at least 10% or at i.e. Interest Rate of 120% per annum - absolutely contradicting RBI norms and exploiting the common masses / needy people.
Now, for a moment, consider the below scenarios: -
In a day, mPokket sends 50 lakh SMSes to lure common man for availing loan from their mobile app.
Following a standard Sales Funnel conversion ratio of 2%,
Number of people from common mass that will fall prey to these SMS due to their personal needs = 1 Lakh users
Investment of only INR 1000/- per user by mPokket as initially the credit limit is deliberately capped to 1000/-
Total Investment = 10 Crore.
Sure-shot Returns per month = 1 Crore per month as INR 1000/- is such an amount that nobody will want to invite trouble of nuisance from mPokket due to Non-Repayment of mere INR 1040/-
The work-from-home executive who calls and forcibly convinces the target to book the first loan request in a hurried manner gets his / her commission of INR 10 or INR 15/- per first loan request of INR 1000/-
Consider SMS charges per conversion of INR 50 paise or max INR 2/-
Effective Net profit even after deductions of all associated charges = INR 107 - INR 27/- (on the highest side) = INR 80/- which is still 8% per month and 96% per annum.
Although, we common masses should not be concerned about the profit margins that they are making, RBI is there to keep a check. and Even if these NBFC's escape RBI monitoring, they cant sustain long hiding from RBI scanners.
However, MAIN CONCERN IS THAT COMMON MASSES END UP PAYING MUCH MORE HIGH AMOUNTS TO THESE NBFC's (MOBILE BASED MONEY LENDERS) as COMPARED TO WHAT THEY WOULD BE PAYING TO ANY LICENSED RBI BANK. Certainly there is a some correction required in the Financial System to enable and empower common man rather than letting them exploited by these NBFC's.
Its a pureply gimmick and a syndicate to exploit common masses in INDIA under the pretext of extending their support to under priviledged common masses who are deprieved from Indian Banks for a personal loan facility.
Companies like mPokket should be banned and RBI should revoke their NBFC Lending License at earlist and take strict actions on all the parties involved in this syndicate to exploit the needy and under-priviledged common masses to extreme levels.
