Wednesday, 24 February 2016

A Way of Helping – Medical Emergency Loans

For most of the people living in Delhi/ NCR, Rs. 60,000 may not be a huge amount. But for someone whose mother has to be operated, falling short of such an amount, even after putting in all his savings, this amount can be HUGE!

Such was the case with one of our borrowers. The person living in Ghaziabad (a suburb of Delhi) and working in a private limited company wanted an amount of Rs. 60,000 for 6 months for his mother’s operation.

On successful registration of the case on our platform, our lender reviewed the case and funded him in approx. 2 hours – that’s all it took for the person to be able to have the confidence that his mother would be operated successfully and would be discharged.

It doesn’t take much from an individual to lend a helping hand and feel good about it.

We, through our platform, would like to work with such borrowers who are genuinely in need and fulfill their requirements

Tuesday, 23 February 2016

Pay Day loans

Pay Day loans

There are times when you make that a last minute expense or an exigency hits you – these are times when you need some financial help albeit for a very short duration. You know that you can cover up when your salary hits your account in the subsequent month. 

What do you do in such cases – run to family members or borrow from friends?

While the above is a reality, we thought why not make it a little formal.

This is where Payday loans come in. Simply put these are short term loans which start from ‘few days’ to a couple of months. Generally these are to bridge the short term mismatch between income and expenses.

While from a borrowers’ perspective it helps tide over that rough patch, from a lenders’ perspective this a perfect solution to park his money for a very short duration and earn a higher income on this money.

RupaiyaExchange offers PayDay loans starting from 5 days upto 60 days with an amount upto Rs. 50,000.

So next time you face a temporary mismatch in your finances – just click

Gold vs. Peer-to-Peer Lending

Gold as an investment is a very popular option, especially in India. Families continue to pour money into gold for every occasion. Gold as an option for investment isn’t really an investment. Rather you can think of it as a hedge against loss in other asset classes such as stocks or real estate. It is a hedge against inflation since the real fear is that the value of the money you hold today will decline tomorrow. With an investment of this scale, it is very important to understand the consequences of investing in Gold.

Why P2P lending is a better option for investment when compared to gold.

Market prices: The profitability derived from any investment in gold depends greatly on the prevailing market prices while investing as well as while resale. This market price is determined by the demand and supply throughout the world. Therefore, it is very important for the investor to keep in touch with all patterns of previous cycles to determine the chances of any further growth and to understand the degree of profitability that is possible.

High making charges: When you invest in gold in the form of jewelry, there are additional making charges which are levied by the suppliers which are not accepted when selling the gold stock.  These making charges result in higher investment from you without any repayment in the future which greatly reduces the total value you receive from the investment. In Peer-to-Peer Lending, this is not a possibility. Market Lenders may charge additional service fees but these additional charges are always transparent and conveyed will before any investment. Often market lenders (such as Rupaiya Exchange) do not even charge lenders any fees.

Physical storage: While most investment options take place virtually, some of them such as real estate and gold do not. Gold being a precious metal requires storage in secure locations which proves to be a disadvantage as it requires extra investment on top of the base investment in the metal itself. Additionally, if the quality of storage is not up to par, it may result in oxidation and discolouration. This is a great advantage if you instead invest via Peer-to-Peer Lending. P2P Lending is a virtual platform. Here all investments are done virtually and no physical storage is required.

No regular income: While investments are a long term commitment, they usually provide regular rent or dividend which provides you with more cash in hand through the tenure of the investment. Unfortunately, investment in gold does not provide any such income. Any investment only reaps benefits once resold in the market. Once an investor invests capital via P2P Lending, he/she starts receiving regular payments in the form of EMIs every month. The principal amount plus total interest is divided to calculate the amount of capital to be repaid by the borrower per month. By the time the tenure of the loan is completed, the amount is fully repaid.

The quality of investment: Trust is a very big factor while investing in gold. While the investor can have the gold samples scrutinized, there is no way to know for sure the quality of the gold itself without being an expert in the precious metal. This may result in dilution of the purity of gold. There can be no shortfall in the quality of a borrower as an investor is provided all documents of the borrower along with an analysis of his credit worthiness which is shown by an allotted credit score.

Gold as an option for investment continues to be a very popular one but it isn’t easy or convenient. Keeping that in mind, investors need to look at other options available in the market. Peer-to-Peer Lending is new and built to be convenient to masses. With ever changing technology to meet market demand, it makes the investment as well as acquiring credit an easy task.

Source : Rupaiya Exchange

Friday, 19 February 2016

Real Estate vs. Peer-to-Peer Lending

Real estate as investment has become more and more popular over time. Even though investment in the sector collapsed after the 2008 financial crisis, people still invest a considerable amount of capital in real estate. We take a look at how investing in real estate fares against an alternate asset class viz. Peer-to-Peer Lending.

1. Capital Outlay: Real estate requires a huge amount of capital investment. A lot of people do not readily have this amount of capital available at all times. Even if someone opts for debt financing (and the corresponding Income tax benefits), at least 20% of the value of property has to be self-financed – which can be substantial. Though everyone is anticipating a change in the IT rules, in this budget, however, the benefits related to income tax exemptions are also limited to 3 years.  

Hence, if you don’t have adequate capital available, the other options are not very favorable.

On the other hand, Peer-to-Peer lending does not require high capital investments. Most P2P Lending websites allow you to invest lower quantities and spread your risk.

2. Low Liquidity: Real estate investment is a highly ill-liquid asset class. Properties can't be sold quickly or easily without a substantial loss in value. This means when you do need immediate capital and cannot source funds from anywhere else, using your real estate asset is not an option for immediate capital.

Peer-to-Peer lending, on the other hand, have liquidity. Firstly, as a lender you get monthly payments on your investment. If a situation arises where you require your money before the tenure is over, you have the option of selling the contract to another lender who will take your place and receive the pay-out instead.

3. Cyclical nature: Real estate prices tend to have cyclical and are generally dependent on demand and supply in an area and/ or the state of macro-economic affairs in the country. If one is stuck in a wrong cycle or there is an incorrect assessment of prices, it can drastically erode the capital value of the investment.

On the other hand the capital and interest in a peer to peer lending parlance remain unaffected by the state of economic affairs. The investor receives fixed monthly income.

4. Management and Maintenance: Regular maintenance of a property is a necessity. There are refurbishment or regular maintenance costs that have to be incurred with respect to holding a property. Furthermore, there are annual/ monthly maintenance charges that are to be paid in a RWA and yearly property taxes.

Compared to this, a peer to peer asset does not come with a burden of maintenance. With an ease of online investing and monitoring – everything is there at a click of a button.
While real estate is still a well-known investment option, it is not the easiest one. It requires a lot of effort and time from the investor and demands high involvement. This is not the case for P2P Lending.

Wednesday, 17 February 2016

Stocks vs. Peer-to-Peer Lending

When making investments in the market, it is very important to know where to invest. You must make sure you use the correct financial instruments to invest so that they complement your daily habits. Be it the amount of risk you take or the time you’d like to dedicate. 

Therefore, in the next few articles we will tackle some of the predominant investment options and how easily they can be used to increase your wealth.

Stocks are one of the most popular financial instruments in the world. People have multiplied their wealth by many times through stocks. What does it take to be able to make money through stocks?

  1. Money: We all know that market volatility is a part of the stock market. It’s extremely important to understand how a market works to even start investing money. Millions of dollars have been lost due to recklessness in the stock market game. There isn’t much room for error in stocks. Gaining experience slowly means having a lot of capital for you to let go as the amount of time you spend learning defines how much money you will lose. Though with Peer-to-Peer lending there is still some risk, you can spread this risk among borrowers. The chances of default are quite low and there is a very low chance of you actually losing money. With new P2P Lending websites, you are even provided tools and data which assist you in making the right decisions.
  2. Time: Having time along with a lot of effort is a prerequisite for investing in stocks. You must be on top of your game at all times. Stocks require continuous management to ensure that you are always invested in the right industries. Without correct care you can lose all your money overnight. Investing in stock markets requires you to have a ton of information about all industries along with knowing every single detail about the industry you have invested in. There are so many factors which affect stock prices and you must keep an eye on all of this. This involves giving a lot of your time to studying the market. Peer-to-Peer Lending on the other hand does not need constant care. You must only understand the profile of the borrower at the time of investment. Once the investment is made, you only have to enjoy the returns.

While the returns from stock markets can be inviting, the risk and time required to handle stocks is very high. So if you are a person with a big bank account and lots of time, stocks may be the answer for you. If not, you should definitely look at other financial instruments, especially Peer-to-Peer Lending.

Tuesday, 16 February 2016

Recession Friendly Investments

Economic recession is a very real and a very scary situation that countries have been in before and this will continue to take place. Recession has very dire consequences such as high unemployment rates, fall in profitability of firms, fall in living standards. While governments continue to try and fight it off, it is very important to take necessary steps to ensure your well-being during a time of financial crisis.

Take a look at how you would be affected during such a time:

  1. Employment: When recession hits, one thing that starts happening is that people start being fired. It happens in companies big or small. You never know if you will be laid off next and end up being in a perpetual state of fear. In case of a scenario where you are laid off, where will you find another job. Finding employment will become tougher than it already is
  2. Getting a business loan: At a time of financial crisis, you will never hear about how well an industry is doing because they’re not doing well at all. This means that the government has to take necessary steps to ensure that the right industries are being stimulated so that the economy doesn’t collapse completely. At this point of time the bank doesn’t have much money left to give out to other industries, mainly start-ups and SMEs
  3. Getting a personal loan: As the amount of money in the economy dips, you start to struggle to pay bills. When families fall short on money, they turn to banks and other financial institutions to get loans but the problem there is that even though they’ve become more relaxed with their eligibility criteria, they haven’t forgotten about it completely. Which means while it’s easier than before to get a loan, it’s still quite a task. At the same time, most of the money has anyway been pumped into the bigger industries so personal loans are not a priority for banks to disburse.
  4. Investment options: The economy is failing bit by bit and it’s taking all investment opportunities with it. Be it real estate or stocks, all prices are falling and falling drastically. There won’t be any place where you can invest without losing all your money.
Enter Peer-to-Peer Lending.

Peer-to-Peer lending is one financial instrument which will survive the recession. While rates will fall and the money to be made will be relatively less, even then there will be money to be made. Here is why:

  1. Borrow: With majority of the money being pumped into the priority sectors, all borrowers will turn to alternative finance solutions. This will result in a great demand for capital funding which will come from private investors. P2P lending will, at that time, receive a great increase in the demand for personal as well as business loans.
  2. Invest: With such a boom in the demand for loans, ample supply must also be provided. This is where private lenders, who have no other financial instruments left to invest in, will move in. Private money at this point becomes extremely valuable as personal and business loans start being funded at competitive rates.

While when recession hits us we will see a great decline in the rates given by market lenders, it will still be a much better bet than any other options that will be available in the falling market. Peer-to-Peer lending is here to stay whether during economic boom or recession.

Monday, 15 February 2016

Why Peer-to-Peer Lending is here to stay

We have discussed how new P2P Lending platforms are proving to be more and more efficient. This is especially true when you consider how banks function.  Though, this new industry is still representing only a fraction of the volume of loans that banks process, at present, P2P lenders can compete with larger banks due to favourable regulatory treatment and use of sophisticated technology.

While banks are definitely pushing forward to become more technologically advanced and with P2P Lending becoming a global phenomenon resulting in more regulations, is there a possibility that marketplace lenders are only a temporary phenomenon? We don’t think so.

Banks and P2P lenders operate in a very different way. Banks essentially earn a major part of their income from the arbitrage on interest rate. This means that banks continue to borrow at minimum interest rates and lend at maximum rates. On the other hand, market place lenders bring together borrowers and lenders, try to get better deals for both and as a result charge fee from a closed deal. This means that they are more efficient and more transparent. Instead of preying on the ignorance of their customers, they charge a fee which clearly defines how much the customers have to pay and why they are paying it.

With this amount of efficiency and transparency, P2P Lenders are more effective to form good relationships with their customers and build this on trust. It is this trust which drives both borrowers and lenders back to marketplace lenders every time credit is required. This is a great contrast to banks. Banks drive to extract value from their customers and use it to 
the banks’ advantage instead of creating value for their customers.

Firms in the financial sector have access to immense data and this can either be used for the gains of the firm itself or to create meaningful insight for their customers. 

Marketplace lenders are placed to win, given their use of technology and their primary motivation: creating value for their customers.

Friday, 12 February 2016

Role of technology in alternate finance: Part 2

Role of technology in alternate finance: Part 2

Alternate finance is the new kid on the block. And it’s got along with it a lot of innovation to play with. While old systems continue to exist inefficiently and ineffectively, technological innovation is paving the way for superior finance options. Though this is an extremely positive movement in the industry, we must also be aware of the most important factor in the industry: Credit Risk.

Being oblivious to credit risk can run cash flows to the ground. It is extremely important to maintain credit checks to minimise the opportunity of default. A lot of credit checks are done manually by human beings. This is time consuming and lowers the overall efficiency of a lender. This is where technology comes in. Thanks to innovation, credit checks can now be done in a matter of seconds and this credit check is extremely accurate. It gives you exact details of a person’s behaviour and analyses various parts of the person’s background. When it comes to automated credit checks, systems look at some particular things:

  1. Social behaviour: This factor maps how a person behaves socially through social media platforms. Social media platforms are virtual websites where a person interacts with his/her social group; be it friends, family or co-workers. This behaviour also helps evaluate his/her credit worthiness.
  2. Web presence: Systems also take a look at online activities of a person to understand his/her behaviour. Data regarding the online behaviour of a person gives valuable insight on how the person behaves. This kind of behaviour helps understand more about his character.
  3. Fraud detection: Technology now can track fraudulent behaviour to understand if a person is likely to default or not. Some set parameters check if the person is likely to commit fraud and this greatly reduces the credit risks of a lender.
  4. Financial activity: Of course, the most basic factor is the financial background of the person. Financial activity of a person gives a lot of insight into a person’s life and this is a very important factor in understand how credit worthy he/she is.

While we have to make sure that we minimise credit loss, we cannot be frivolous with regard to the credit rating of a person. Technology helps us become more accurate and more efficient with this regard. Technological innovation is the right path for alternate finance and we must follow through with full speed.

Wednesday, 10 February 2016

Role of technology in alternative finance - Part 1

Mainstream banks are known for their medieval IT standards. The situation is slowly getting better but many institutions are still struggling to advance from systems from the last decade. They are stuck with legacy mainframes that are very difficult to move on from.

On the other hand, new firms involved in alternative finance are moving at very fast speeds in terms of technological innovation. New and elegant systems are taking over manual intervention and speeding things up for the whole industry. What kind of role does technology have to play in this sector?

Data: Technological advancements have helped various firms handle data like never before. Firms can now handle huge volumes of data with ease thanks to new and improved systems that have been set up. This has helped the firms becomes fasted and more aggressive in the industry helping push it to new levels

Automation: With highly effective technology, a lot of work that was done manually has now started being done automatically. These systems have set algorithms which ensure maximum accuracy while doing tasks. Not only do these systems reduce manual labour but also ensure that the possibility of errors is minimal

Efficiency: Technology in general has helped increase the efficiency of the industry on the whole. With accurate and effective systems in place to take care of a lot of tasks, the output that a firm can have has increased by many times. This amount of output not only generates higher revenue but also helps the firm cut a lot of costs.

Alternative Finance is often presented as the enemy of mainstream banking institutions. Though it is correct to say that Alternative Finance initially emerged to fill gaps left in the industry by the then leading banking institutions, alternative finance now serves more than just those that the banks cannot help. Instead of working as competitors, banks and alternative finance providers are now collaborating to resolve all the gaps left in the system. While alternative finance is leading the way for technological innovating, a lot of advancements are trickling down into the mainstream banking world.


This is the first part of the series with detailed overview to be covered in following parts

Tuesday, 9 February 2016

Why is P2P Lending becoming more popular with investors?

Investors are constantly on the lookout for new investment opportunities which require minimum input and maximum output. A new concept has emerged that adheres to these two criteria: Peer-to-Peer lending (P2P Lending).
P2P Lending has started becoming popular with investors everywhere. With its efficiency and effectiveness, it’s overtaking other financial instruments as a choice for investment. Some reasons for this transition are:
  • Convenience at your fingertips: Peer-to-Peer has taken financial technology to the next level by providing investors an option to invest their money without ever leaving their chair. Through smartphones and laptops, investors can now invest their money into various profiles and track these investments along with their repayments without any requirement to meet any staff member or the borrower himself/herself.
  • Better access to money: Closing procedures of banks and institutional lenders are cumbersome and limiting. There is a lot of paperwork and other underwriter requirements that make it a real hassle. With Peer-to-Peer lending, there is less hassle and fewer limitations. Once you have registered yourself, you can freely invest in whom so ever you like without going through any paperwork every time.
  • Make the most of limited capital: With P2P Lending, there is no defined amount you must invest. You can invest as little as INR 1,000. This opens up a lot of avenues for an investor and you do not have to put all your money in one place. Even when you have limited capital available, you can continue to invest your money and generate income.
  • Spread the risk: With most investment instruments, you end up putting all your eggs in one basket. This increases the risk to an exponential amount. Any default that takes place will sink your investment completely. With Peer-to-Peer lending, you can spread the risk as much as you want by investing in various credit seekers.

Whether you are a small investor just looking at different options or someone who invests a substantial amount of capital regularly, Peer-to-Peer lending is always a very attractive investment option.

Monday, 8 February 2016

Entrepreneurs: Peer-to-Peer Lending vs. Crowdfunding

Alternative forms of business finance have become quite popular these days considering how difficult it is to get loans from traditional sources. Crowdfunding and Peer-to-Peer lending are two innovative ways to acquire funds for your business. Both industries have been making headlines and catching eyeballs over the last few years. While they have similar concepts, P2P lending and crowdfunding are actually very different from each other. This is something people do not realise.

Crowdfunding is a process where business owners can create a campaign which consists of a pitch and rewards that backers will receive if the campaign is successful.  Crowdfunding opens your idea to a marketplace of supporters. Peer-to-peer lending is slightly different. In this business owners upload their requirement and all documents necessary to prove your worth as an entrepreneur. P2P Lending platforms then puts you across registered lenders who take a look at your profile and they may fully or partially fund you.

Both options have great benefits but at the same time, they also have drawbacks.

Drawbacks of crowdfunding:

  • You need to fulfil all rewards you promised: You cannot do whatever you please with the money. A lot of the money goes into producing the end product and actually shipping it to your backers
  • It’s a public endeavour: If you fail, you will fail publicly with thousands of backers losing their money.
  • You need to bring your own crowd: In order to rank well and show up on the websites initial pages you need to already have enough momentum. Most crowdfunding campaigns don’t even receive pledges from strangers and majority of their funds come from their own social network and marketing efforts.
  • Marketing is a must: This takes time to develop and launch and at some point you will exhaust your own social network.

Drawbacks of Peer-to-Peer lending:

  • Payment of EMI: Once the funds have been received, you have to start paying off your loan almost right away in the form of EMIs. Any default regarding repayment will have very serious repercussions and therefore you must be very punctual.
  • The amount you can raise: It’s easier to raise higher amounts of funds via crowdfunding rather than Peer-to-Peer lending. Since the number of Peers providing the funds are much lower, the funds provided are generally lower.
While both options are great for raising funds, Peer-to-Peer lending definitely has an edge over crowdfunding. It is a fast and accessible way of getting funds injected into your business. The primary plus point of using either options is that you don’t have to give up equity. With Peer-to-Peer lending you do not have to market since the platform will get you in touch with potential lenders and at the same time strangers will lend to you. You do not need to bring your own crowd to get funds.

Peer-to-Peer Lending as an alternative finance option is becoming more and more popular by the day. It is time to embrace it for the growth of your firm and to be able to take it to the next level.

Friday, 5 February 2016

Risk and rewards can be inversely proportional - SURPRISED!

While each one of us have studied during school days that there is a direct relation between risks and rewards i.e. Greater the risks, greater the rewards.

At Rupaiya Exchange we wanted to do something different. We wanted to make this theory 'little' opposite - we wanted to come to a point where without taking any risks, there could be huge returns.

How is this possible? Read on....

With our peer-to-peer lending marketplace, our goal is to effectively and efficiently borrowers with lenders.

The platform has seen the rate of returns upwards of 20% (on an average) with maximum being 32%. Considering the rate of interest offered by FDs is at 8% or so (average) that's a huge upside. On the other hand the stock market offers healthy returns but the churns of volatility is not everyone's cup of tea!

So we spoke about the all looks ok till here.

Coming to risks - while someone may ask that these are collateral free/ unsecured personal loans - how come they are secure?

This is where Rupaiya Exchange offers its Principal Protection Plan - this means that while the loan contract is between the lender and the borrower; during the tenure of your outstanding loan to an individual, Rupaiya Exchange would guarantee that your principal amount is secured.

Hence your risks are limited or I would say negligible!

Considering the above and that the returns are actually inversely proportional to the risks - for an investor this is the best place to be.

My question to investor community is why look at something else? I wonder....what's the answer?

Four predictions for P2P Lending in 2016 for India

Peer-to-Peer Lending has been growing slowly over the past few years. This concept is starting to be recognised by individuals.

While it is still growing, we believe that 2016 will be an important year for P2P Lending.
Here are some predictions regarding it:

  1. Regulations: As Peer-to-Peer Lending is slowly becoming more and more popular across the globe as well as in India, it has caught the attention of the RBI. P2P platforms in various countries are regulated by their respective regulatory agencies. In India however, no regulations are in place yet. That may change this year. The RBI is currently studying the system thoroughly and we can expect regulations to be released later this year.
  2. New Entrants: Slowly, more and more firms are joining this industry. P2P Lending is becoming more popular every week and as the number of firms is growing, so is the amount people are talking about it. There currently are very few players in the market but that is beginning to change.
  3. A Serious Asset Class: With P2P Lending gaining popularity by the day, investors will be forced to consider Peer-to-Peer lending as a serious asset class. As P2P Lending becomes more mainstream, investors will gain confidence and there will be more inflow of capital into this industry. Along with private investors, many large institutions are also getting involved lending to SMEs.
  4. Fall in market rates: With so many investors and borrowers completing loans in a secure and regulated way, there will be a lot of competition for prevailing rates in the market. This will force the market rates to fall, greatly benefiting the borrowers as their cost of acquiring a loan will become less.

While these predictions are based on various prevailing factors in market, they are still just predictions. We will have to wait and see what this year has in store for us. 

Thursday, 4 February 2016

Route to Alternative Financing

A lot has been written about Peer to Peer lending (P2P lending) and some of the users have taken the benefits of this unique and growing concept.

One might think what is in for me? Can this really benefit me?

The answer is YES. Consider the following, these are some of the points that are adopted by almost all P2P lending sites or platforms:

  1. No minimum salary or income requirement
  2. CIBIL Score (above a certain level) not mandatory – considering all P2P lending platforms have their own unique way of credit checking
  3. No minimum continuation of the job or businesses continuity or vintage criterion
  4. No collateral
  5. Speed processing
  6. Relatively lower interest rates
  7. Online and hence 100% transparent

Honestly, the list can go on…

Not to say that P2P lending platforms do not do credit checks; almost 60% of applications received by a P2P platform can get rejected too. However, the reasons for rejection would not be based on salary or balance sheet size. As mentioned above every platform has its own unique way of credit assessment.

Some of the studies for India have said, that approximately 70% of Indian population is still unbanked because of the ‘stringent’ eligibility criterion formulated for obtaining loans from the financial institutions.

Considering above the borrowers should be happy to deal with the P2P platforms and start obtaining loans for whatever needs they have from education to business… through this route of Alternative Financing.

Wednesday, 3 February 2016

Start-ups turn to P2P Lending

As an entrepreneur, have you ever tried to raise funds for your brand new firm? Whether it is trying to secure a loan from a bank or trying to get funded through private capital, you have to go through a nightmare to end up with a deal you are not happy with. The answer to this trouble lies in Crowdfunding – especially with Peer-to-Peer lending.
Peer-to-Peer lending isn’t only meant for personal loans. It is now a useful source for many start-ups worldwide. Studies show that P2P Lending to start-ups is increasing 200% per year. This trend can be easily identified when start-ups often have to deal with the overly cautious and risk averse attitude of mainstream business finance sources.
Here are some reasons as to why Peer-to-Peer lending is the fastest growing branch of the alternative finance sector:

  1. No dilution of equity: The first and most important factor which grabs your attention is the fact that via P2P Lending, securing funds do not mean your share of the company is diluted. If you were to accept funds from any private financer (equity based), your control over the company would be diluted. By accepting funds through debt, you are securing your control over the company’s future.
  2. P2P is a modern solution for business finance: Even if a business goes to a big bank with a functional idea of a brilliant new product and a fantastic business plan, they will still feel a lot of frustration as a result of the banks’ reluctance to lend. With online platform, applying for a loan becomes much easier and is a refreshing change. Most forward thinking entrepreneurs are now turning to P2P lending which can provide the right amount of flexibility that a start-up requires when it comes to securing funds.
  3. P2P Lending businesses understand start-ups: With Peer-to-Peer lending still relatively new to the market, alternative lenders in the space have faced many of the challenges that all start-ups must overcome. Therefore, with P2P lending there is a very high chance that you will be dealing with individuals who have a genuine and personal understanding of what you are going through.
  4. P2P Lending is fast: Companies who are successful in getting finances from mainstream sources still have to go through very slow and tedious processes which are not suitable considering the fact that these firms usually require a rapid source of finance. With p2P, the application process along with disbursal of the loan is extremely quick. Start-ups need this kind of speed and efficiency.

As Peer-to-Peer Lending is growing, a variety of borrowers are joining these platforms for very different reasons. Everything from a cell phone to a business can be funded on these platforms at loan rates and loan payoff duration decided by the borrower. The opportunities are endless.

Tuesday, 2 February 2016

What does P2P lending Advocate?

Peer-to-Peer (P2P) lending is a relatively new concept that has started gathering attention. P2P Lending helps all those individuals who are not able to avail funds from other sources such as banks to get in touch with Peer who may be interested in providing them small personal loans. In China alone, P2P Lending has become a very big thing with lending transactions in 2015 crossing $151 Billion.

To have a check on these systems, agencies set up various rules and regulations so that malpractices do not take place. P2P Lending firms in the US are regulated by the SEC, firms in the UK are regulated by the FCA, etc. These regulatory bodies ensure that the firms follow a set of regulations which protect all those who enlist as peers. Unfortunately, China did not have such regulations set up.

However, there are firms taking advantage of P2P lending and hence portraying it in incorrect light. For example, police arrested 21 people in relation to a Ponzi scheme that reportedly took about $7.6 billion from nearly 1 Million investors through a Peer-to-Peer lending service, Ezubao.
About 95% of the advertised investment projects were fake and over 1,000 employees are suspected of illegally taking deposits from the public, something that P2P lending does not advocate.

P2P Lending is a marketplace concept and should and only facilitate communication between borrower and lender. All investments are/ should be done directly by the lender to the borrower.

In India, while there are no regulations at the moment, RBI is actively studying the P2P lending arrangements as they are slowly gaining traction.

However, generally Companies in this space have stringent practices, KYC norms and credit checks for both lenders and borrowers before an on boarding. Further, as mentioned above, no deposits should be taken by such companies from lenders to further invest in borrowers.

We, as P2P lending platforms, have a responsibility towards the borrowers, lenders and the system to ensure that the larger objective of serving the stakeholders is effectively and efficiently met.  

Monday, 1 February 2016

Understanding your alternate credit score

Understanding your alternate credit score

Your credit score is usually your passport to getting a loan. In India however, the largest credit database only has about 300 million records in a country of 1.25 billion. If you are one of the many borrowers without a credit score or have a thin file, your chances of getting a loan are slim.

Lending institutions such as Peer-to-Peer lending websites are now looking at ways to evaluate your credit worthiness from other sources. When a borrower doesn’t have a formal credit score or has a score which does not allow him/her to receive  a loan, the lender derives his/her credit worthiness based on digital data accumulated from various sources. 

Many lenders derive information from data accumulated from bank statements, mobile usage, online transactions, social media, etc.
  • Location services on mobile phones are used to establish places of work and residence.
  • SMS mining helps lenders understand transactions that take place in the person’s account and helps establish patterns.
  • Purchase records on e-commerce websites provide a large amount of data to be analysed.
  • Social media profiling takes place where the lender scrutinises the person’s social media profiles (Facebook, LinkedIn, etc.) to establish a person’s connections
  • Mobile bills helps the lender understand the behaviour of the person with regard to regularity and discipline.
  • Mobile phone usage (such as frequency of accepting calls against not answering them) also helps bring to light a lot of details about the person.

This type of credit valuation using secondary data is relatively new and is starting to gather attention slowly. At this point there are no pre-defined formulas that lenders can automatically use. Without any credit score, banks and other NBFCs never give out loans. 

With growth in Peer-to-Peer lending, the concept of providing loans without a credit score provided is becoming more accepted as Peer-to-Peer websites are providing their own valuation of the person’s credit worthiness.

Therefore, even for a person with a low credit score or one who does not have one altogether, getting a loan is not absolutely impossible thanks to alternative methods of understanding a person’s credit worthiness which is becoming more and more popular among Peer-to-Peer lenders.

For more details about peer-to-peer lending please visit