Following Prime Minister Narendra Modi’s promise of providing a loan worth Rs 1 crore in 59 minutes to small and medium enterprises on Friday, 2 November – a move which was lauded by many – a Facebook post by a man named Maheshwar Peri, the founder and chairman of ‘Careers 360’, raised some serious questions about the whole scheme.
In his post, Peri found a connection between the scheme and a Gujarat-based company, named ‘Capitaworld’, which till March, 2017 (two years after it was incorporated) did not run any operations and whose latest director ran Modi’s campaign back in 2014.
How Was the Company Selected?
Speaking first about the company, Peri found that although it had been incorporated on 30 March 2015, the company had not ran operations till at least 31 March 2017, at which point its revenue was slated at Rs 15,000.
The signatories of the company are Jinand Shah and Vikas Shah. Another director on the board, Vinod Modha, works as a strategic advisor for corporates, including Nirma and Mudra, which was earlier owned by Anil Ambani.
The questions asked by Peri in his post regarding this was, how was this company, that is based in Ahmedabad, selected to be a part of this scheme, considering it wasn’t operational till at least 2017? What were its qualifications?
“How was such a massive project trusted to a company with no experience? What were the terms of the contract? Any projections on how much Capitaworld makes?” he asked.
How Does Company Sanction Loan & Tag Bank?
Now coming to the process of applying for the loan, Peri said that the first thing the applicants would see on their screen was an ‘in principle’ sanction mail containing an auto-generated message, with an algorithm doing the calculation and responding to the applicant and tagging a bank.
However, the question here was, how did the company sanction a loan and tag the bank? Is it even possible for it to do that without being a lead generation platform?
Does the Application Fee Go to Capitaworld?
According to the scheme, all applicants have to pay a fee of Rs 1,180 on application, as well as 0.35 percent of the loan as processing fees, for being considered eligible.
According to Peri, Capitaworld makes its money from the banks, who in turn load it on the customer. Along with this, after March 2018, the company inducted four new directors, one of whom was Akhil Handa, who ran Modi's campaign back in 2014.
Other than the fact that the company would hold essentially all the data of all the applicants, does the process of this scheme imply that all the money from the application fee plus the processing fee goes straight to the company? Besides the extraordinary amount of money it would then gather, if thousands of MSMEs applied for the loan in this case, did the company provide data privacy and Non-Disclosure agreements?
These are just a few of the questions that Peri asked in his post, while stating that the loan promised by Modi was still a long way off.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)