Sunday, 18 October 2015

P2P Lending – An Opportunity for the Common Man!

Mr. Talwar*, aged 57, is heading an NGO in Kolkata. The NGO has been established to serve juvenile delinquents and mentally challenged. Prior to this, Mr. Talwar was heading the Administrative Department of an MNC.

Today Mr. Talwar is looking for a personal loan of Rs. 5 Lacs for his daughter’s wedding. Given his credentials and his professional career, Rs 5Lacs loan should not be an issue. However, there is one concern: Mr. Talwar is employed as a contractor/professional with the NGO and hence does not have salary slips to prove his income.
Since his salary slips are missing, no bank is ready to lend money to Mr. Talwar. While some NBFCs are ready to work with him, the interest costs are high, discouraging him to enter into a contract with these institutions.

Mr. Talwar while browsing through the internet refers to a P2P platform, and registers himself as a borrower. Few questions from the Rupaiya Exchange team, due diligence of his documents and after a personalized phone call, Mr. Talwar is successfully approved as a Borrower on the platform.
This is a true story.

The above depicts the power of P2P lending, which helps professionals like Mr. Talwar break barriers created by typical financial institutions and a ‘checklist’ driven approach adopted by them.
P2P Lending platforms are a reality and represent an Alternative Financing opportunity. This is an inclusive initiative for people with a sound track record, but are marred by the unavailability of one or more of ‘important documents’ or a ‘low credit’ score to qualify for the ‘right’ borrower.

The P2P lending platforms devise their own approach (Rupaiya Exchange has a detailed in house credit check mechanism as well) to check the credentials of the proposed borrower and give them alternate ratings. Not to say that the P2P platforms do not reject borrowers or loan application; rejections do happen, however these are in cases where there are serious flaws in the credentials of the proposed borrower or loan listings and such reasons are explained to the borrowers in detail.
The P2P lending scenario is already dominating the US and Europe economies with large players like Lending Club, Prosper, Zopa etc. established and flourishing and touching the lives of common individuals.

In India, P2P lending is at a very nascent stage but with the right momentum and ability to solve problems of the common man, like Mr. Talwar, it has a huge opportunity to grow.
*Names have been changed
@RupaiyaExchange is a virtual market place for Peer to Peer Lending.

Rohan Hazrati (@HazratiRohan) is the Founder of #Rupaiya Exchange. He has worked across geographies and in his last assignment was the CFO of a multibillion dollar enterprise.
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Views are personal
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