Aphro Finance is neither a bank nor a financial institution, yet it claims to provide interest-free loans between Rs6 lakh and Rs33 lakh to women in Tamil Nadu to buy homes constructed by itself or its sister concern. What is the source of funding for AphroFin?

Anyone who want to take a home loan is little nervous about the prevailing interest rate which is over 10% due to the higher interest rate regime since past several months, courtesy, unabated inflation and rising policy rates. However, there is one company in Tamil Nadu that claims to provide interest-free home loans. Only catch is you need to buy a home built by its own sister concern.

Aphro Financial Services Pvt Ltd (AphroFin) and Aphro Micro Finance Pvt Ltd are the two companies based in Chennai. While not much information is available about these companies and the Aphro group of companies, the name of its director IP Yesudoss continues to be in focus. In fact, AphroFin’s website is full of Mr Yesudoss’ images and videos.

Here is what the company says: “The rules and regulations of many banks and finance companies are very severe. For example, the ways to get those loans are easily approachable by only educated people and not by illiterate and poor people. So these innocent people have to look for the help of others to get credit. Loan got after these system will be of high interest. Therefore within a few months people are not able to return the loan and they get more loans to repay and lose their happiness. Aphro was started to give a new dimension to these old systems. At this time of strong rules, regulations and high interest, Aphro started its office in the place where poor people live to support them with easy rules and less interest for the future welfare of them by giving business loans.”

Nothing wrong in providing loans to the needy. However, to do this on a large scale one needs to be super rich or a bank or financial institution. Unfortunately, AphroFin is none of them. It is just a broking agency-cum-builder. This is what is written by the agency on its site: “Aphro is a funding agency committed to the welfare of the people. Aphro was launched with the view to ensure the overall well–being of the people. We give loans to eligible people, under various schemes. Each scheme is designed to ensure 100% benefit to the borrowers…”

However, here is what it says about the loan under its terms and conditions...

“Your agreement with Aphro Finance does not constitute a guarantee of a loan as the lender grants the final approval and evidence may be required. We will act as your credit broker for the purpose of securing a loan or finance.”

When Moneylife contacted Aphro Trust (another unit or front of AphroFin), under the pretext of a loan seeker, one of the company’s managers said that the company doesn’t provide information over the phone. Information about loans and repayment is given when we visit the company personally. The company’s Hindi and English phone numbers are out of service. Also, the “Contact Us” section on the company’s website—http://www.aphrofin.com/contactus.php—doesn’t provide the location of the company. One has to fill in the details on the website.

Here is what the manager, said, “Loans are not provided for places outside Tamil Nadu. The company has just begun its operations. The company constructs buildings and give home loans for buying flats in those buildings only. We do not have any tie-up with any banks and the loans are provided by Aphro Trust.”

According to the information provided by an AphroFin representative, Aphro Trust is constructing buildings at about eight locations in Tamil Nadu and the buyer or loanee has to buy a flat in one of the buildings in order to avail the home loan. Aphro Trust has just started construction of the buildings and expects to complete them over next eight to 12 months.

AphroFin says: “Under this scheme Aphro builds and transfers Rs6,00,000 to Rs33,00,000. The scheme is operational across Tamil Nadu. It is enough if the loan taken is paid back and settled in instalments. The loan can be settled over a period of 15/20/25 years. Eligibility: 1) Anyone living in rented houses can apply 2) Allotment orders are given in three months and built-in homes are handed over in one year’s time.”

While there is no interest on loans offered for buying homes built by its own units, AphroFin, however, charges an administration fee for every application. The amount is not revealed. AphroFin also provides personal loans or business loans at an interest of 6% per annum, contrary to what every other lender in the country charges. This is surprising, especially when some banks are offering 6% to 7% interest on savings account while AphroFin if asking for just 6% interest on a loan!

Aphro Financial Services Pvt Ltd is registered with the ministry of corporate affairs with a CIN no. U65922TN2011PTC079076 and has shown its authorised capital as Rs5 lakh with Rs1 lakh as paid-up capital. This raises question about the source of funding of AphroFin and its units—Aphro Trust and Aphro Micro Finance. Similarly, while AphroFin maintained that it does not provide funding on its own and merely acts as funding agency or broker, it is revealed that the loans are provided by Aphro Trust.

Aprho Trust exists only on AphroFin’s website and few of its branches. There is no information available about the trust and whether it is genuine and properly registered anywhere. In addition, from where it is receiving the funds for distributing to women without any interest is a big mystery. Actually, this should have ringed loud alarm bells. But it has not. No one, including the police, administration and tax authorities are finding AphroFin’s business model strange and doubtful.

The reason? Last June year, Aphro Trust organised a function at Rajalakshmi Paradise Hall near Madavaram in Chennai to donate Rs5,000 each for 1,000 children belonging to its women members. And, according to information on AphroFin’s website, it was attended by P Sakthivel, joint commissioner of police (traffic), Chennai, Anthony Johnson Jayapal, commandant/ superintendent of police, small arms, Tamil Nadu along with several priests, educational officers and lawyers.