The Lender process | How to Lend Money | P2P Lending Platform | Faircent

The Process

Registration

The registration process is quick and easy. A lender simply clicks on the Sign up Now icon, enters some basic information and uploads the documents required. The verification process is generally completed within 24 hours and the lender is notified so that he/she can login and start lending immediately.

Similarly, Borrowers registered on the site are identity/credit/risk assessed. Basis their intention, ability and stability to repay loan our automated system provides an indication about the Borrower’s capability to efficiently repay the loan. The rate of interest ranges from 12% to 28% and the loan tenure from 6 months to 36 months.

Borrowers

With the aim to give more choice to Lenders, Faircent has multiple types of Borrowers and categories of borrowers including those with limited credit history. Sometimes, due to limited data, it is difficult to assess their risk profile and hence, this type of segment of Borrowers is listed at higher interest rates. However, please note that such Borrowers bear a very high risk and loans to these have an increased potential to default. Faircent provides only automated collections support for such Borrowers and categories. Faircent is only an intermediary providing an online platform to connect borrowers and lenders and as such is not liable in any manner for any default of the borrowers. Hence, we urge you to carefully consider the risk involved before offering loans to such high risk Borrowers.

Lending

The aggregate exposure of a lender to all borrowers at any point of time, across all NBFC-P2P platforms can be increased up to ₹50,00,000/- However, as per regulatory guidelines, to increase the limit beyond ₹10,00,000/- a lender must submit a Net Worth certificate certifying minimum net-worth of ₹50,00,000/- signed by a practicing Chartered Accountant (CA). Faircent facilitates this process at a nominal charge. To know more a lender can contact his Portfolio or Relationship Manager or reach out to us on [email protected].

To ensure secure, fast and smooth transfer of funds with every transaction on the platform, Faircent has opened a Lenders Escrow account under the trusteeship of ICICI Trusteeship Services Ltd.

Lenders need to transfer the amount (not less than the minimum first recharge amount) they wish to lend through Faircent into their virtual Lender Escrow account. The first recharge should be for minimum amount of Rs. 50,000/- and all subsequent recharges should be for a minimum amount of Rs. 5000/-. Once the loan transaction with the borrower is complete, Faircent will transfer the amount directly to the borrower’s bank account after deducting any applicable fees and charges.

The salient features of this account are:

• Faircent has no right to intervene or option to withdraw monies for its own use from this account.
• Lenders give instruction through Faircent to ICICI, a SEBI registered trustee and the execution of instructions will also be carried out by ICICI Trusteeship Services Ltd.
• Faircent cannot do any transactions, only view the transactions done through this account.
• The trustee will independently audit the operations of this account on a regular basis.
• Usually, the virtual lender escrow account only show a balance relating to funds which are in transit. However, if any amount remains unutlised for an extended period of time, the lender may contact our support team to authorise an action of refund of such amount to the lender's bank account. 

The Lender Escrow account can be funded or recharged using the following methods:

• NEFT/RTGS: Lenders can log into their bank account and wire transfer the amount over NEFT by using the IFSC code and Lender Escrow account number provided by Faircent. Currently, IMPS is not supported.
• Net banking/Debit Card: Lenders can log in to their Faircent account through the website or app, click on the “Add Money” icon on the top left corner of their dashboard, enter the amount and choose the net banking option of their respective bank.
• UPI: Select UPI as the payment method, enter the amount to add to the escrow account and click on Pay Now. The transaction details will be displayed on the next screen. Upon clicking ‘Submit’, a QR Code will be generated, which the lender can then scan using a mobile app that supports UPI payments. After the payment/deposit is made successfully, the screen will refresh with a notification about the fund transfer. Use the UPI Virtual Payment ID available on your escrow passbook to transfer funds from any UPI gateway at no additional charge. Escrow recharge is supported by all UPI gateways. Lenders can use any UPI payment gateway like Google Pay, Phone pe or Bhim etc. to recharge their escrow account by sending funds to the unique UPI Virtual Payment Address (VPA) available on the “Virtual Escrow Account details” section of their Escrow Passbook.
• PayTM Wallet: At a nominal fee, PayTM can be used to recharge the escrow account through net banking, UPI, debit card or PayTM wallet
• Cheque: Lender can transfer the desired amount in Faircent’s bank account and share details of the same with their portfolio manager. Once the cheque clears the amount will reflect in the Lender escrow account.

 

Please note that third-party gateway fee is applicable as per the method used and are subject to change without notice. Such fees will be notified to you by Faircent or the Payment Gateway at the time you are making a payment. Following is an example of fees applicable:

• Net Banking/Debit Card:
  • INR 15 + GST per transaction.
  • For SBI bank customers, the fee of 1.4% of the transaction amount + GST is applicable.
• UPI:
  • No charge
  • INR 10 + GST per transaction for value above INR 2000 
• Wallet:
  • The following charges per transaction will be applicable depending on the mode used:
    • Debit Cards: 0.9% per transaction for amount above Rs. 2000/- + GST
    • Net Banking: INR 10 per transaction + GST
    • PayTM Wallet: I.4% of transaction amount + GST

 

Once a lender has pre-funded the Lender’s Escrow account with the amount he wishes to lend, he can start lending by sending proposals to borrowers. Loan listings are visible on the lender’s dashboard along with relevant financial, credit and personal details of each borrower. Lenders can use this information to make an informed choice and send a proposal to fund the borrower. Offers are accepted on first come first served basis. A lender can fund up to 10% of a borrower’s total loan requirement.

Household Account

Lenders from the same household lending through the platform can link their accounts under a single log-in window and allow the primary account holder to lend on behalf of all family members using the Household Account. To know more a lender can contact his Portfolio or Relationship Manager or reach out to us on [email protected].

Re-Lending on Maturity

In order to provide Lenders the benefit of compounded returns, we encourage them to choose to automatically re-lend their money in a plan or borrowers or borrower categories of your choice on maturity.

Loan Disbursal

Loan disbursal begins only after the official loan agreement has been signed and the borrower has provided the required number of Post-Dated Cheques towards security and repayment of the first EMI.

The Agreement

Faircent facilitates the signing of an online, legally-binding agreement between the Borrower and the Lenders. The agreement is available online on the borrower and lender’s Faircent account. They login to their respective accounts, read and understand the terms and conditions mentioned, “digitally sign” by clicking on the acceptance box under the agreement and the process is complete. The process, though legally binding just like a physical agreement, is faster and more efficient ensuring faster flow of loan amount from lender to borrower.

Disbursal and Repayments

Loan is disbursed from the Lenders Escrow Account to the borrower’s bank account. After the loan is disbursed, the Lender will receive EMIs on or before the 15th of every month. If a borrower fails to pay an EMI within a stipulated time, a penalty is levied on the borrower which is payable to the lender.

The first EMI is payable by cheque. Thereafter, repayments– EMI and pre-closure – are made through an online, automated procedure. Every month the entire EMI amount is collected directly (through auto-debit) from the borrower’s account to the Escrow account, from where it gets reflected in respective lenders virtual account.

Credit Assessment Methodology

Credit assessment of a borrower is done to understand the risk of default. For this purpose, financial, social and personal background check is undertaken basis certain documents submitted by Borrowers, such as income and bank statements.

Various factors considered by our fully-automated credit evaluation mechanism are:

Stability: Stability is understood basis the nature of borrower’s residence i.e. rented/self-owned, length of stay at the same address, length of employment in the same organization etc.

Ability: Ability is evaluated by studying the borrower’s income & expenditure behavior. For example, a healthy percentage of income saved reflects better ability of borrower to repay his/her financial liabilities.

Intention: Intention is understood by analyzing the past repayment behavior of the borrower towards his financial liabilities. Delayed repayments in past financial transactions reduce the chances of loan approval. For this purpose, bureau reports are procured (with prior consent from the borrower) and evaluated.

Banking Habit: A bank statement helps to judge banking habits of a borrower. Several parameters like average monthly balance, cheque bounce and unaccounted transactions, if any, are taken into consideration for assessment of a borrower’s credit worth.

Verification at different levels: Other than telephonic verification to get first-hand information from the borrowers, Faircent also undertakes physical verification at both the residence & office address. All documents submitted by the borrower are also verified for forgery using state-of-the-art technology.

Faircent Rule engine, an in-house algorithm, assigns different weightages to all the above factors to compute a score that helps determine the interest rate, loan tenure and amount at which the Borrower’s loan request can be listed on the platform to secure funding from the lenders.

Collection Activity

P2P lending is a market-linked asset class, open to the risk of default. We urge all Lenders to go through default rates, transparently mentioned on the statistics page of the website and understand the risks involved before lending.

At Faircent, we try to keep default-rate to a minimum by taking numerous steps to mitigate risk. Every borrower registered with us is identity-checked, credit-checked and risk-assessed by our experienced team to ensure that only highly-curated are listed on the platform. The loan is disbursed only after the borrower signs the legally-bound loan agreement. Auto reminders (SMS and Call) are sent to all borrowers 3-5 days before the EMI due date.

However, though we do our best to manage the risk at every step, defaults can happen.

In case of default, Faircent has a 4-step soft recovery process to collect pending payments on behalf of Lenders.-

• In-house collection team establishes communication with defaulting borrower and follows-up for pending payments (Call/SMS)
• Legally-compliant collection agencies follow-up
• Legal-notice is sent on behalf of the lenders
• Legally-compliant recovery agencies try to recover pending amount on behalf of lenders

All collection and recovery related activity undertaken on defaults, if any, is updated on lender’s dashboard on real-time basis with last action taken. Hence, the lender is not dependent on human interface to stay updated on all phases of recovery and can do so by simply logging in to his account.

Please note that Faircent provides only automated collections support for Unrated Borrowers. Expenses incurred for sending legal notices and by recovery agency are borne by the lender.

Collection and Recovery Process is on best-effort basis which may not result in recovery and hence the risk of loss of both principal and interest exists. Faircent is only an intermediary providing an online platform to connect borrowers and lenders and as such is not liable in any manner for any default of the borrowers. We urge you to read all terms and conditions thoroughly and understand all the risks involved before lending.

So, go ahead SIGN UP and take the first step to make every % counts!