Home / Without Label / Why more and more people are routing for Peer-to-Peer Lending in India?
Monday, 28 December 2015
Growth of Peer-to-Peer lending
The Peer-to-Peer lending market in the west found its significance in the 2000’s, by then a lot of American population was still new to the term. It started with launch of Prosper, followed by Lending Club and soon other platforms came into play. The company’s offering later came under securities after coming under the Security and Exchange Commission’s ruling.
The regulations ensured the transparency in working of their business models, which also led to more people trusting the platforms with their money.
The two companies Prosper and Lending Club alone have serviced over 664,000 Loans amounting to $18 billion in total.
In the United Kingdom the first company to disburse loans in peer to peer model was Zopa which started in February 2005, and has serviced GBP 1 billion in loans. Other key players such as Funding Circle and Ratesetter have disbursed loans amounting to GBP 900 million and 870 million.
The peer to peer lending industry in India is unregulated currently, and the Reserve Bank of India has no plans to regulate this because of the current volume.
People in India are being drawn more towards Peer-to-Peer lending largely because of its ease of access and benefits. In a country where apart from Banks majority of the loans are facilitated offline by various channels and among peers.
The edge of the technological era has brought people more closer and organised information in ways which have defined the living of a modern man. The banks working in between, charge a higher interest rate, and have tedious processes and documentation, the peer to peer aspect gets loans to Borrowers with lower rate of interests and at the convenience of their home.
Borrowers from different professions having varying loan requirements, have their loans listed on Peer to Peer lending platforms. The lenders assess each borrower’s profile based on their loan grade and documents such as bank statements etc.
From a lender point of view this option offers better rate of interests on their savings compared to the traditional investment options such as Mutual Funds, Stocks, and Fixed Deposits.
In India a lot of companies have surfaced in the Peer-to-Peer lending domain as online marketplaces or communities to issue loans among peers.
Rupaiya Exchange is one such platform which has a credible base of borrowers. The company authenticates and does background checks on each loan request followed by a loan rating. It leverages social media to ensure a lower default rate among borrowers compared to other platforms.
Socially conscious platforms such as MicroGraam and RangDe which work in the non-profit sector have also drawn a lot of attention.
With successful models of Peer to Peer lending being demonstrated around the world, the Indian customer is finding these online platforms as a convenient option for their finances. The trend for Peer-to-Peer lending is growing rapidly with more people gaining a positive experience from these platforms.
About Rohan Hazrati
Rohan is the Founder of the Peer-to-Peer lending platform Rupaiyaexchange.
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