With the increased adoption of digitization among banks and financial institutions, the lending landscape has been changing. The traditional method of lending is still in use, particularly in higher-value transactions.

BFIs, on the other hand, has launched a few products that allow customers to obtain collateral-free, paperless, and faster loans in a smaller amount.

One of the most recent products is 'FoneLoan,' which is intended to provide small short-term loans to bank customers via the bank's mobile banking application.

F1 Soft International, a fintech firm based in Nepal, created the product. This service is currently available to customers of Nabil Bank, Laxmi Bank, and Kumari Bank.

What exactly is FoneLoan?

FoneLoan is a digital lending product that allows you to get a loan of up to Rs. 1,00,000 without having to go to the bank. Customers will obtain a loan in real time, as soon as they submit an application.

What exactly is Decision Analytics?

Banks use this software to determine a customer's eligibility. Decision Analytics examines the transaction history and other relevant factors of all bank customers who have a salary account.

Individual scores are generated by the tool based on the analysis. Customers who meet the bank's minimum credit score will be eligible to apply for FoneLoan.

One of the primary criteria, according to bank officials, is monthly credited salary. Aside from that, the bank examines the account's average balance, withdrawals, loan status, loan repayment history, and customer transaction behavior.

The decision analytics program also evaluates the amount cap for each qualified based on their salary amount and deposit history, according to bank officials. When requesting a loan, the sum for which the customer is eligible will appear.

If the savings account of the customer's banking transaction improves favorably over time and the customer repays the FoneLoan on time, the customer's score can increase and the customer can pass the bank's minimum threshold.

How does FoneLoan work?

Laxmi Bank Smart FoneLoan

Laxmi Bank's 'Mobile Money' banking application is required. If the customer qualifies, a ‘Smart FoneLoan' feature will be available in the mobile app.

The customer must use the ‘Kumari Smart Mobile banking app to log in. The ‘Apply for Kumari Loan' icon will be available to qualifying customers.

One must choose a repayment date that is not more than 30 days after the loan is disbursed. The customer will be sent a four-digit OTP code via SMS, which they must confirm by clicking "Confirm." The money will be credited to the customer's account right away.

A loan of up to Rs 1,000,000 is available to the consumer. The monthly interest rate is 12 percent.

“The loan processing fee is Rs 200,” says Anish Pradhan, Kumari Bank's Head of Digital Banking.

Nabil FoneLoan – Nabil Bank

The customer must have the “Nabil SmartBank” mobile banking app. If someone is eligible for the loan, the ‘FoneLoan' icon will appear in the app.

The user must first register by clicking the FoneLoan icon. Following that, they will be given an OTP number. The loan will be approved right away, and the customer will receive the funds in real-time.

The maximum loan amount is Rs 1,000,000, and the interest rate is 15%. According to Binay Regmi, deputy chief executive officer of Nabil Bank, the customer must pay 0.75 percent of the loan amount as a processing fee when applying for the loan.

According to Regmi, the customer must have a six-month transaction history to be eligible for the loan.

Kumari FoneLoan – Kumari Bank

The customer must use the ‘Kumari Smart Mobile banking app to log in. The ‘Apply for Kumari Loan' icon will be available to qualifying customers.

One must choose a repayment date that is not more than 30 days after the loan is disbursed. The customer will be sent a four-digit OTP code via SMS, which they must confirm by clicking "Confirm." The money will be credited to the customer's account right away.

A loan of up to Rs 1,000,000 is available to the consumer. The monthly interest rate is 12 percent.

“The loan processing fee is Rs 200,” says Anish Pradhan, Kumari Bank's Head of Digital Banking.

Loan's Nature

The lending process is entirely digital, and the customer is not required to visit the bank in person.

Because the loans are pre-approved, the eligible customer receives them immediately.

Although the concept appears to be similar to that of a credit card, there are a few key differences.

The customer can only use the credit when making a purchase. However, unlike a credit card, the loan amount in FoneLoan is credited to the customer's saving account, giving the customer the flexibility to use it for any purpose. In addition, unlike credit cards, FoneLoan does not allow customers to take out multiple loans.

Before applying for another loan, each FoneLoan must be completely paid off. There is no restriction on taking the loan again if the resettlement process is completed each time.

The customer can obtain a micro-loan ranging from Rs 5,000 to Rs 200,000 through this service.

Repayment

The FonePay loan has a 30-day resettlement period. Prepayment of the loan is currently not permitted, according to bank officials. However, if they intend to pay within 30 days, they must specify the date when applying for the loan.

For example, if a person wishes to pay the fee in 15 days, he or she must specify this when applying for the loan.

If the loan is not completely settled by the maturity date, the amount that remains unpaid will be considered overdue, and the customer will be required to pay daily interest as well as a late fee in some cases.

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