Laxmi Bank’s Smart FoneLoan lets you borrow loans up to 2 lakh from your phone

Laxmi Bank Smart FoneLoan Collateral Free 2 lakhs Phone Loan
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Securing a loan in Nepal entails going through the arduous process on banks or other financial institutions. However, things are getting simpler now thanks to the introduction of FoneLoan facility by different banks in Nepal. As of now, Laxmi Bank, Citizens, Kumari, Mega, and Nabil Bank are offering the “Smart FoneLoan” feature.

Here, since we had an account with Laxmi Bank, we decided to try out its Smart FoneLoan facility. Simply put, Laxmi Bank’s Smart FoneLoan is a paperless loan service. It does not require any collateral to be eligible, while the application procedure is completed in a matter of minutes.

Laxmi Bank Smart FoneLoan Overview:

What is Laxmi Bank Smart FoneLoan?

In its most basic form, it is an entirely digital method of applying for and receiving a loan. Laxmi Bank customers can simply use the bank’s mobile application, Mobile Money (Android | iOS), to apply for a short-term pre-approved loan.

Smart FoneLoan uses an algorithm known as “Decision Analytics” to determine a customer’s eligibility for the loan and its eventual approval. And after the customer agrees to the terms and conditions, the approved loan amount will be disbursed almost instantly.

Who are eligible?

For the time being, the service is available to customers with payroll/savings account in Laxmi Bank. Besides this, they also need to meet other criteria defined by the analytics algorithm. This implies that not every Laxmi Bank customer can access this service.

The pre-programmed algorithm thoroughly examines the user’s past transactions, account history, and other factors to determine their eligibility.

Here, the Decision Analytics algorithm mainly focuses on four factors:

  • Average monthly balance of the account
  • Deposits and withdrawals in the account
  • Status of existing loans in bank
  • History of previous loans in bank

With this, the system generates a cumulative score of every individual account holder. Then, if a customer’s score meets the bank’s minimum threshold limit, they will be able to apply for Smart FoneLoan. This will be indicated by the “Register for Short-term Loan” prompt in their dashboard of the Laxmi Bank Mobile Money app.

Laxmi Bank Smart FoneLoan feature in Mobile Money app

Even if you are ineligible for Smart FoneLoan for now, don’t worry. Provided that your account’s status grows positively in the favor of Decision Analytics’ parameters in the future, the algorithm will automatically enroll you on the eligibility list.

Meanwhile, if you’re wondering how to check the score of your account, let me be clear: you can’t. Like I mentioned earlier, if you see a “Register for Short-term Loan” widget on the Laxmi Bank app, you’re good. Otherwise, you’re not.

Limit and time period of the loan

Now because it’s a collateral-free loan, you can only apply for loans ranging from Rs. 500 to Rs. 200,000. However, not every account holder can apply for a loan as high as two lakhs.

The maximum applicable loan amount for an account is also determined by the Decision Analytics algorithm. For example, if it determines the limit of Rs. 75,000 for a certain account based on the aforementioned parameters, then the individual can apply for a loan amounting to Rs. 75,000 or less. Besides this, the maximum tenure to repay the loan is 30 days.

How to apply?

So, if you’re eligible, you can apply for Laxmi Bank Smart FoneLoan by following these simple steps:

  • First, click on the “Register for Short-term Loan” option displayed on the landing window of the Mobile Money app, after you log in.
  • Then, proceed to register your email and click the verification link forwarded to your email account. Laxmi Bank will use this verified email for notifications, authorizations, and other purposes.
  • Now, you will see the “Apply for Virtual Credit Card” window in the app. It is displayed so since this short-term loan acquisition facility’s working principle is the same as a digital credit card.
  • Then, input the desired loan amount and payback date in the two input fields given.
  • After you enter the amount and date, click on the “Check Eligibility” option to find out the maximum loan amount your account is eligible for.
  • In case you’re happy with the amount applied and the tenure date set, proceed to tick the terms and conditions checkbox after reading it. Then, click on “Proceed”.
  • Or, if you’d like to make some changes to your loan’s variables after learning the max applicable amount, head back to the previous window and make the desired change.
  • After this, you will receive a card verification value (CVV) number on your registered phone. Enter the received CVV in the given field and the applied amount will be automatically deposited in your account—after deducting all the pre-defined fees, that is.

Charges and payback process

Here, even if the process seems a bit sophisticated, Laxmi Bank has kept the charges to a minimum. An applicant will be charged a flat Rs. 250 as the loan administration or processing fee regardless of the loan amount. Similarly, the monthly interest rate is only 1.25% of the loan amount (or 15% p.a.). And if you set a payback date of less than a month, you’ll only pay interest for the number of days.

Smart FoneLoan - Maturity Date

Moreover, the payback process is quite simple. If the account holder maintains the net payable amount on the day of the loan’s maturity, the system will deduct it automatically.

To note, Laxmi Bank Smart FoneLoan does not have a pre-payment option. That means even if one collects the payable amount before the loan’s maturity date, they’re still unable to clear the loan. You need to wait till your maturity date expires and pay the daily accrued interest until then accordingly.

However, if you fail to maintain the required balance, you will be fined Rs. 300 as a late fee every 30 days, plus daily interest. Also, every subsequent deposit made into the account will first be debited to pay off the loan.

Similarly, if your account is in overdue status for a longer duration, Laxmi Bank’s loan recovery process following Nepal Rastra Bank’s regulations will be initiated. But considering Smart FoneLoan’s minimal fee structure, no honorable person should face this problem.

Laxmi Bank Smart FoneLoan: Conclusion

To conclude, I would say that the FoneLoan service introduced by multiple Nepali banks is a much-needed move towards boosting the country’s digital economy. Since it does not require any in-person human intervention either, that’s another win in this time of the pandemic. We expect the concerned authorities to further push the boundaries of cashless culture in Nepal in the future by introducing similar technologies.

  • Watch: Laxmi Bank Smart FoneLoan Explained (Nepali)