Faircent Review – India’s 1st Peer to Peer Platform

December 29, 2020
December 29, 2020 Mr. Meher

Faircent Review – India’s 1st Peer to Peer Platform

Faircent

8.2
8.2

Onboarding Process

9.0/10

Variety of Loans

9.0/10

Ease of Use

8.0/10

Mobile App Usability and Speed

7.0/10

Customer Support

8.0/10

Pros

  • Onboarding Process and great
  • Multiple Type of Loan Options
  • Experienced team
  • Mobile app is robust
  • Customer support is good

Cons

  • Managers focus less on low investment profile
  • Options can feel Overwhelming
  • Website Looks from 90s and need a more morden look
  • Mobile app can be a bit slow

FAIRCENT REVIEW

Faircent is India’s 1st Peer to Peer lending platform, and we will do a deep dive and do a detailed Faircent review. How does it work? Is it suitable as an investment platform? Defaults and percentage returns.

Lending is an age-old concept. So is Peer to Peer Lending. Peer to Peer lending is also called Person to Person Lending. One person(Lender) who has extra money lends money to another person(Borrower) who needs money for some purpose like business, emergency, health or education etc. Since old times, money lenders and wealthy people have been lending money to the poor at interest against mortgages.

The government around the world authorised Govt. banks to handle money lending. As privatisation and reforms took place in late the ’80-’90  multiple private banks opened. But the banks were mostly brick and motor store and could not meet the demand of many borrowers as verification and collection became challenging. With the advent of the internet, many of this bank went online, but lending was still the same. They depend on physical verification, which limits the reach. They could not lend to all, depriving many rural parts and migrant workers to the mercy of money lenders who charged hefty fees and exploited them. Credit Scores were developed to ease the lending process, but credit scores did not address the young lender who had just passed from college and did not have a credit history.

Enter peer to peer platforms. They are trying to fill the lacunas by having most of the borrower verification process online through innovative AI-based analysis that continuously learns and improves. Thus, identifying groups of borrowers that are reliable but banking systems can’t reach.

Faircent has championed the cause of Peer to Peer lending and today we will do a detailed Faircent Review.

 

Faircent Review

India’s 1st Peer to Peer Platform

From Faircent

“The idea of Faircent.com was born out of a personal experience”, Rajat says. A colleague of his used to borrow small loans from multiple friends for a particular need, and Rajat goes on to say, “He once wanted to buy a motorcycle and he had posted on Facebook requesting his friends and family for a portion of the funding, and in a week, he was riding his motorcycle to office. This incident, coupled with my knowledge and experience in building online exchanges previously, led to Faircent.com.” However, Rajat didn’t feel, in 2011, that the ecosystem was conducive for a P2P finance platform. And another obstacle for him was the fact that the concept of Digital Payments was still evolving back then. In 2013, however, the ecosystem was more conducive to create Faircent, so the company was incorporated, after spending almost a year in developing the product with the co-founder & COO of Faircent, Vinay Mathews, in 2014.

Ref : Faircent

 

 

Why Faircent?

The 1st platform for Peer to Peer lending in India

2013 saw the launch of Faircent, the 1st peer to peer marketplace in India, and have survived the ups and downs of the market for the last eight years. Faircent through experience has evolved and has a professional team backing up the platform. So the from onboarding to lending, it feels much smoother than most peer to peer network.

The variety of loan profiles they have

Faircents most significant advantage is industry-wide tie-up for loans which allows investing in a wide variety of loan providers and types of loan. From education to healthcare. From rural to tie-ups with Fintech companies like Mobikwik for loans. It helps in diversifying our lending.

The security and reliability of the platform

For Eight years, people are making money from the platform, which brings in reliability. However, no Peer to Peer Platform can give a reliability guarantee. But Faircent is at least reliable over a period.

Loan Profile Testing Parameters

Over the years, they have increased the number of parameters, and the rating and +ve and -ve section in each profile help make an educated decision. Also, they check a profile in several parameters before giving a rating or allowing borrowers to list in the platform.

 

 

Onboarding Process

Faircent has a simple process for registration.

You enter your details. Please give them a scanned copy of the ID proof, address proof and Pan card. Provide your bank details for the transfer from Faircent when asked.

Once you provide the documents, which is generally coordinated by the onboarding manager from Faircent, you get a call from the manager assigned to help in onboarding and ensuring your documents are in place, and your KYC is approved. Unlike other platforms, this hand-holding makes the process very easy and something I found outstanding.

Once KYC is approved, you have to transfer funds to the Faircent Escrow account. You can get the details from the Escrow Passbook tab on the left column.

Escrow accounts are generally from ICICI bank and start with FAIRLF……. . Generally, Banks mobile Apps cannot add this, and you need to log in to your browser to add the account.

Now you can add the money. An Account manager is assigned to your account. They call you, or your onboarding manager gives you his details. You can also see his details on your main dashboard below your name.

 

 

Main Dashboard

Faircent Review Front Page

The Main Dashboard looks like the above. going through the panel

Each of them is described in brief below :

Auto InvestAuto Investment History Portfolio AnalysisEscrow PassbookBank AccountInvestment LimitNominee DetailTransaction Detail
It lets you set criteria for auto-investing. For example, you can set the category of loans to risky, moderate or safe—also, the amount you want to assign to each and type of Loans. We will discuss in the next section the details of the kinds of loans.
The Segment contains many exciting tools. The Risk calculator asks you questions based on which gives you an estimated risk category you should take. Wealth Builder lets you calculate your total amount once you invest based on the principal amount, the rate on investment and time on investment(investment horizon).
Unlike Investment diversification, portfolio analysis looks at different loans profile. It lets you create a dummy portfolio and what if investment into different existing borrowers and gives you estimate returns and details analysis of XIRR and expected defaults, among others.
The segment is like a bank passbook. We can see details like loans given, money added to the passbook, cash left. It also displays your escrow bank details.
IThis section shows your bank details. Faircent transfers the fund to this account if you withdraw.
It shows the Max limit (10,00,000) you can invest in Faircent. It also offers a method to increase the Max limit to 50,00,000. To increase the max limit to 50 Lakhs / 5 million, we must provide proof of income and the total worthiness of the individual.
Nominee Detail is something you should fill. The person who can claim the account should something happen to you.
Are the details of all investment and also EMI returns and other tax-related details too.

 

Loan Profiles

Faircent Review would be incomplete without its loan profiles. It’s the most significant advantage of Faircent is multiple loan profiles to choose from, from corporate to the individual to self-help group. Below is a non-exhaustive list of loans type available in Faircent, along with the brief details of the same.

There is 3 Primary Type of Loans

1) Term Loans

Term Loans are either to Individuals or to group loans.

 

2) Pool Loans

Pools Loans are Loans that a company backs. So investor pool money with a minimum investment of 1,00,000/, the total pool is in Crores. The company takes the money and further lends on interest. The interest is 12-14%. Generally, the amount in such loans is very safe as the company takes the risk of bad loans. Pool Loans is for big investors who want a fixed return on investment.

 

3) LOC Loans

From Faircent Website

The LoC Loan is an innovative product offering that enables a borrower to withdraw and repay funds based on an overall credit limit and interest rate approved for the borrower. The borrower pays monthly interest only on the outstanding amount. Such monthly interest is directly debited from the borrower’s bank account monthly and repaid to lenders. These are short term loans, with the borrower having 90 days to repay each withdrawal fully. Since the borrower can repay at any point in time, the amount of interest paid back to lenders varies, though the interest rate is fixed. Any part payment made by the borrower is first adjusted to the pending interest and then to the principal. Borrowers can make a fresh withdrawal only if all dues concerning prior withdrawals are clear.

LOC Loans are new loans and will soon be available in Faircent and is at present not available.

 

 

Statistics of Faircent

Observations :

 
DPD**: Days Past Due
  • The Net Annualised Return rate is 7.83 % at Faircent.
  • A Cautious Portfolio across all DPD is only 0.1% although the returns are also low 7-10%.
  • A Balanced Portfolio, the DPD total is 8%. The return is 15-18% and makes up for the due outstanding. Here you have to note that DPD 90-180 days still has a chance of recovery. So actual DPD will be lesser.
  • Anything above Balanced is Risky.
  • If Aggressive and Super Aggressive Portfolio are chosen then it should be complemented with a big investment in either the Group Loan or Pool Loan to balance the risk factor.

 

 

Final Word on Faircent Review

While working on our Faircent review, we found it is an old and reliable platform for people looking for long term investment. A minimum of 4-5 years investment would result in good returns and as they further they are refining loans profiles so as to reduce defaults. Also, the CEO, Rajat Gandhi has vast experience in this field and is the President of the Association of NBFC-P2P Lending Platforms so there is a sense of reliability with the team.

There are a few points they could still work on :

  • The website has not been refreshed and is old school. Their app is not the best and hangs at the login screen from time to time. This is a clear sign of stagnation caused by the old guard of the company. Finzy.com has such a clean and easy to use interface.
  • If the amount invested is low, some account managers do not spend time with the client and give generic suggestion. Also, they seem disinterested at times. Faircent should give importance to even small investors because they might be prominent investor in the future.
  •  They should re-evaluate some -ve or +ve criteria. Like its -ve criteria if a person has an office in his own house, but it can be a big positive as he does not have to pay rent. He does not have to pay rent.
  • A video explaining the features of the website or a PPT would be great for people starting. As the Interface can be overwhelming.

 

 

Should you Invest?

Yes for Investors who can invest upwards of Rs: 2,00,000/- and can hold for 4 – 5 years and play smart, you can expect very good returns above general Mutual Funds and FDs.

 

If you like our Faircent Review you can read more Reviews of Fintech Startups below :

LENDENCLUBVESTED FINANCE
LenDenClub was born with the idea to connect people seeking money in a legal/regulated way with lenders who would be willing to invest money in return of interest and to do so using a technology platform. The technology platform allows people with money to connect to people seeking money in a regulated way. REVIEW HERE
Vested Finance offers its Investors an option to keep zero balance accounts and fractional share investment in US Stock Market. They also provide curated pre-built portfolios knows as vest for easy investing. These portfolios are curated for investors with various risk profiles.  REVIEW HERE

 

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