The 12% Club

The 12% Club, every individual is curious to know about it. So let us understand this from Nikhil and Akhil.

Akhil: Hey Nikhil, what is this 12% Club? Is this a new club where we get a 12% discount on all?

Nikhil: Oh, my dear Akhil, this 12% Club is not a recreational club. It is a technology-based application for borrowing and lending funds powered by Bharat Pe.

Akhil: You mean this 12% Club is not a club, it is a bank?

Nikhil: No. It is a platform that acts as a sourcing and technology partner to the NBFC.

Akhil: Oh Nikhil! It's so confusing, can you tell me exactly what the 12% Club is all about?

Nikhil: The 12% Club is a platform where NBFCs offer you the opportunity to earn a return of up to 12% on amounts you invest by deploying them with NBFC  peer-to-peer platforms ("P2P NBFC  Partners")  and also allows borrowing from their lending partners at an interest rate of 12%  per annum.

Akhil: Does the 12% Club guarantee my return on investments?

Nikhil: No. The 12% Club merely acts as an agent to their NBFC partners and does not guarantee your return on investment.

Akhil: Who are their NBFC partners?

Nikhil: 12% Club partners with various P2P NBFC Partners for providing these services. The investment amounts are placed with RBI-regulated P2P NBFC, Innofin Solutions Private Limited ("LenDenClub"), and  NDX  P2P Private Limited ("Liquiloans"), and the borrowing is extended by RBI-regulated NBFC - Hindon Mercantile Limited.

Akhil: How can I create an account on 12% Club?

Nikhil: It's very simple, you just need to update your KYC on 12% Club, and it's ready.

Akhil: That's very easy, but how will earn money over there?

Nikhil: Once your account is created, click on add money to start earning 12% returns on your investment (based on deployment to borrowers and repayments by borrowers through the P2P NBFC Partner) or click on borrow money to take loans at 12% interest subject to your creditworthiness as approved by our lending partner.

Akhil: How to add money to the 12% club account?

Nikhil: You can add money using UPI, Debit Card, or Net Banking and the interesting part is there are no charges to adding money to your 12% Club Account.

Akhil: When is the return earned on an investment in the 12% Club?

Nikhil: The return is earned daily on your investment based on deployment with registered borrowers through the P2P NBFC Partner.

Akhil: How do I get a return of up to 12% on my investment?

Nikhil: You can earn up to 12% return on your invested amount. The return is in form of interest paid by the borrowers to whom the money is lent through P2P NBFC Partners.

Akhil: Can you help me understand this with the help of an example?

Nikhil: Sure. Let's say you invest ₹ 1,00,000 with 12% Club. You will earn up to 12% return per year - ₹ 12,000 and ₹ 33 per day. Return will be earned from the next day (based on disbursement to a borrower).

Akhil: How much money can I lend?

Nikhil: Exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000. Aggregate exposure of a lender to all borrowers at any point of time, across all P2Ps,  shall  be  subject  to  a  cap  of  ₹ 10,00,000. However, you can lend up to  ₹ 50,00,000  on submitting a certified net worth certificate of ₹ 50,00,000.

Akhil: What is the risk and how to mitigate it?

Nikhil: The 12% Club's P2P NBFC Partner tries to minimize risks by undertaking stringent verification and credit underwriting process. These investments which are in the form of lending  through  their  P2P  NBFC Partner are subject to risk on account of the borrower defaulting on the payment. In case of any default, they do regular follow-up and soft recovery with the borrower.

Akhil: Can I take a loan and lend at the same time?

Nikhil: No, you can either take a loan or lend at any given point in time

Akhil: What happens if any borrower fails to repay? Who bears the risk?

Nikhil: The risk is completely yours, peer to peer lending is unsecured, and even after a rigorous process of granting a loan they do not guarantee risk- free returns or no defaults. However, they have a soft recovery and collection process in place to ensure minimal defaults.

Akhil: How is investing through the 12% club different from directly investing through other NBFC P2P partners?

Nikhil: No difference, you can either invest through the 12% club or can directly invest in any NBFC P2P partners.

Akhil: How do re-investments work? Are the daily earnings reinvested or just the actual investment earns interest?

Nikhil: Daily earnings on your investment do not get re-invested back. They are available for you to withdraw with or without principal in the  usual fashion.

Akhil: Are there any withdrawal charges?

Nikhil: No! There are no withdrawal charges.

Akhil: Can I withdraw my invested amount before the loan matures? Can the invested amount be withdrawn partially?

Nikhil: Yes, you can withdraw the amount in partial or full before maturity. The amount you select will be credited to your bank account according to the terms and conditions of the 12% Club. As per RBI P2P regulations, the maximum tenure cannot exceed 36 months.

Akhil: What are the parameters for dealing with a withdrawal when there are various lenders wanting to withdraw the invested money at the same time that has already been disbursed?

Nikhil: The P2P NBFC Partners have a secondary market and there is no guarantee of liquidation by the 12% Club. If there is a run on the platform the worst that can happen is the money will come in a staggered way depending on the underlying tenure of the loan (which is the average tenure of 6 months). A run on the platform does not mean the underlying loans are bad, it just means the lender has to wait longer to get their money back.

Akhil: How long does it take for the withdrawal amount to be settled in my bank account?

Nikhil: Withdrawal requests are generally processed within 1 business day from the date of request of withdrawal. However, in rare cases, there might be a delay at any of the intermediary bank's end.

Akhil: Where will the withdrawn money from the 12% Club get credited? Nikhil: Withdrawn money will be credited to your registered bank account. Akhil: How do I get eligible to borrow at the 12% Club?

Nikhil: Their lending partner - Hindon Mercantile Limited has a credit policy basis on which eligibility checks happen. You need to have  a  good credit score to be eligible for borrowing. However, there can be multiple reasons for rejection. It may be one of the following:

• You may not be eligible as per their lending partner.
• You may have failed to furnish all valid supporting documents.

Akhil: How is interest calculated on my loan?

Nikhil: Interest is calculated at 12% per annum on your borrowings subject to your creditworthiness. For example - if you borrow ₹ 1,00,000 with 12% Club. The interest cost will be @ 12% interest per year; i.e., 3,000  for  3 months. Interest gets added every day ₹ 33 per day.

Akhil: Are there any conditions for the closure of the loan?

Nikhil: No. You can close your loan anytime. There is no prepayment penalty as well.

Akhil: When do I repay back?

Nikhil: All loans are for a fixed 3-month duration. At the end of 3 months, they pull principal + interest from your registered bank account.

Akhil: How much money can I borrow?

Nikhil: The loan offers start from as low as ₹ 10,000 and up to ₹10,00,000. The maximum amount of loan will differ from person to person depending on their creditworthiness.

Akhil: Thank you, Nikhil, you answered all my queries, now just the last one, in case I have any grievances or complaints, Can I contact them or their lending partner?

Nikhil: Yes Of course, In case of any assistance, you can reach them at: support@twelve.club and their lending partners at helpdesk@mufinfinance.com, customercare@liquiloans.com, info@liquiloans.com, and cs@lendenclub.com

Hope Nikhil & Akhil made you understand all about the 12% Club. The data for the above is sourced from their website twelve.club.

The author can also be reached at Nikhilkothari99@gmail.com