Instamojo is now approving small ticket loans on WhatsApp and it has become an instant hit

Instamojo is now approving small ticket loans on WhatsApp and it has become an instant hit
Instamojo founder L to R: Akash Gehani, Sampad Swain and Aditya Sengupta.Instamojo
  • Fintech platform Instamojo has taken its ‘sachet loans’ to WhatsApp.
  • The pilot run for sachet loans over WhatsApp has already seen 140 merchants apply for over 290 loans worth ₹19 lakhs.
  • During lockdown, Instamojo has already seen a 25% increase in the number of daily merchant sign-ups.
Fintech platform Instamojo has taken its ‘sachet loans’ to WhatsApp. Sachet loans are small-sized loans that the startup instantly approved for merchants and micro, small and medium enterprises. With its latest move, existing merchants on the platform can apply for the loan on WhatsApp and get it within minutes.

The pilot run for sachet loans over WhatsApp has already seen 140 merchants apply for over 290 loans worth ₹19 lakhs. The interest rate ranges between 0.25-1%. For the next day payout it’s 0.25%, for the same day payout it’s 0.5-0.75% while for instant payout it is 1%. The borrowers have to repay the loan in three days.

“The process is pretty simple. Merchants get a WhatsApp notification which tells them that they are eligible for a certain amount of loan and asks them if they are interested. Once they respond to it, we send them more details. Once they confirm, the money gets disbursed immediately. It's a loan disbursed through a series of messages on WhatsApp,” Akash Gehani, co-founder of Instamojo told Business Insider.

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However, the sachet loans, which is currently in the pilot phase, is available only for merchants who are already evaluated by Instamojo and have a valid credit score. “For a product like this which also carries a risk, we do a slow roll out. So, it is currently available only to a few merchants. But the repeat usage of the product has been encouraging. The average ticket size that we see is ₹6400, which is also in line with our average usually,” said Gehani.

Analysts too are betting on this move. “While there are working capital issues quite prevalent amongst small and medium enterprises during this time, a small ticket loan clubbed with on-platform-sales mapping and backed by transaction history-based eligibility criteria is likely to be an instant hit,” said an internet weekly report by JM Financials.

During lockdown, Instamojo has already seen a 25% increase in the number of daily merchant sign-ups. But Gehani also said that they are a bit conservative about who gets loans. Once a merchant signs up, their algorithm rejects or denies their loan plea.

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“We now have 1,500 merchants sign up everyday. In the last two months our loan disbursement average has gone up. In the pre-covid times it used to be ₹10-12 crore a month, now it is ₹14-15 crore a month. While the loan book has gone up, I think it will continue to steadily grow. WhatsApp, which everyone is so comfortable with, as a channel share will also contribute to a lot more,” Gehani said.

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