The concept of social lending or p2p lending in India is only 2-3 years old. It has started to become successful since more and more companies are trying to enter p2p lending platforms. Such type of lending is said to be a practice of debt financing. It allows people to borrow and lend money through an intermediary. The whole process is enticing since the borrowers can get the money without any hassle and the lenders can get good investment opportunities since the debt generates income which is in the form of periodic interest payments. In p2p lending, the interest is often exceeded by that which is earned via traditional investments.
Due to demonetization, the returns from bank deposits have dropped down to the lowest level. This has enabled p2p lending to emerge as the most viable option. Some of the major companies in this industry are Finzy, which undergoes a robust underwriting process so that the interest of its borrowers remains protected. The platform assesses its borrower’s profile on multiple quantitative and social parameters via its proprietary risk assessment model.
Based on their assessment, the interest rate and risk category are then assigned to each borrower. There is also a stringent physical verification process which ensures that the investor has access to a trustworthy pool of borrowers across various risk categories. This also makes sure that the loan portfolio is diversified. The entire process is online and transparent.
P2p lending platforms are heading towards a successful path and there is a plan to expand the operations in major cities in India. Apart from expanding geographically, the p2p platforms are also expanding their product line where they are offering various loans like unsecured loans for MSMEs, gold loans, payday loans, etc.
The precise quantum of loan disbursal for leading p2p lenders stands at around 80 lakhs per month and it is expected that the figure is going to grow rapidly in the coming years.
The latest RBI guidelines of borrowing and lending on the peer to peer platform are safer than ever because all transactions are done are monitored by the regulatory board appointed by the Government of India.
It is a known notion that India needs a trillion dollars to invest so that it can ramp up its infrastructure in the next few years. If the general society can do a better job in financing and lending each other, under a robust system, the fund can be utilized for nation-building.
P2P is a transformative technology which can reduce costs and increase access to capital. This is considered as a boon for a capital-starved country like India.
Crowdlending can weave large and infinitely untapped resources because of the current generation, who is sharing, collaborating and reinventing on a daily basis.