Small loans soon virtually at your fingertips

Your mobile wallet, which has been serving your need for instant cash in an electronic form for sundry transactions, will also empower you further with companies in the business planning to add an instant loan facility to their offerings.

The fast pace of mobile banking growth, coupled with increasing appetite for smart phones among the billion-plus mobile phone subscribers, is what is prompting companies such as Payworld, One MobiKwik and Paytm to add another feature to what currently serves as an electronic debit card.

Stakeholders maintain mobile banking is becoming a big business, with 39.49 million transactions worth Rs.49,000crore. People are no longer averse to using their mobile phones for transactions. They expect mobile wallet business to also grow exponentially from around Rs.1,200crore now.

"We'll soon be rolling out our micro-credit programme. Users can subscribe to small loans and we get interest on repayment. Pilots have been done already. We are awaiting procedural approvals. We expect to launch early-May," One MobiKwik Systems founder BipinPreet Singh told IANS.
"It's instant.

An eligible user will get the loan instantly credited to the wallet. In the pilot stage, we gave small loans from Rs.100-500. Once the programme is rolled out for everyone, users would be able to take loans in excess of Rs.5,000," Singh said.

What does it entail? Mobile wallet companies are tying up with commercial banks and non-banking finance companies (NBFCs) to roll out of the service, which will analyse the history of the users before crediting the loan. Mobile wallet companies, on their own, cannot give loans.

"We've had discussion with the NBFCs to provide micro and nano loans to mobile wallet customers. We will use transaction analysis of the user and provide the same to the NBFC. They will then approve the loan," Payworld chief operations officer Praveen Dhabhai told IANS.

Paytm, however, is looking at a slightly different model. "Customers who open a bank account in our payments bank -- we are launching it this year -- will be able to get in their mobile wallet, not otherwise," said NitinMisra, the company's head of payment products and operations.

In the process, the mandatory "know your customer" verification is also done, he explained. The interest rate, stakeholders said, as also the loan tenure will be competitive. "The duration will depend on the user profile and history between 15 and 30 days.

The date of repayment will be intimated so that minimum wallet balance required for auto-debit is maintained," said Singh. All that the customers will have to do is to click on a specified button in the mobile phone app and then choose the option they have at hand on the touchscreen. Once it's done, the money will be debited to the account in less than 10 minutes.

A loan literally at your fingertip! The stakeholders also brush aside concerns over mobile wallet frauds. "There are stringent checks in place to avoid fraud. There is no way I can open other person's mobile wallet from my device, even if I have the username and password," said Paytm'sMisra.

"The frauds today account from less than 0.07 percent of the total MobiKwik user population. Once a fraudulent account is detected, the user is blocked and is no longer allowed entry into the system," Singh added.

As of the market size of mobile wallet companies, Paytm says it has over 125 million customers as of now, while Mobikwik says it doubled its user base during 2015-16 to 30 million. The third big player Payworld claims to have 10 million users currently. Many more are in the pipeline.

Consultancy TechSci Research says by 2020 mobile wallet market will touch $6.6 billion in India. The Reserve Bank of India has also allowed 145 banks to provide mobile banking services and each can potentially emerge as a provider of mobile wallet -- with an instant loan service.