The last decade has seen a number of financial innovations. Bitcoin, blockchain technology, and Peer-to-Peer (P2P) lending are some of the new financial avenues that are driving a paradigm shift from big banks and the deepest pockets to the smart individuals and startups.
India has always been a big Peer-to-Peer borrowing and lending market since 2012, well served by the individual moneylenders for a fast personal loan, with the bank and formal loans only comprising a minuscule 15% of the market share. A majority of Indians rely on their friends, family members, acquaintances, money lenders, and business associates for borrowing money even today. The largest offline crowdfunding market of the world is now also evolving to be a giant online P2P lending marketplace. P2P loans have the same hassle free access, reliability, and speed, for resolving a number of domestic and business financial anxieties, which the earlier offline financial loans provided.
While the UK was the first country to have a P2P lending online platform by the name Zopa, P2P Lending started taking shape in the year 2012. With the expansion of the internet, Indians got access to P2P loans that were devoid of documentation hassles, and the long loan processing time intervals. P2P loans can also be availed by those who have a bad credit/Cibil score. Hence those who were denied loan by banks, because of a bad credit history, also have an easily available source of the loan. Many businesses in India are asset-light, the country being primarily a services-driven economy. As banks required businesses to have a heavy asset strength for getting a loan, many businessmen could not get the loans for business purposes easily. P2P loans are also quite popular among businessmen today, with 30% of all loans being taken at reputed Peer-to-peer lending websites like LenDenClub, for business purposes. Peer to Peer borrowing is always good at rescuing individuals out of their financial dilemma.
As of now, more than 30 online startups are being accessed by millions of borrowers and lenders, for fast personal loans, business loans, festival loans and other kinds of loans in India. The best amongst them, including LenDenClub, derive their popularity out of the customer friendly services, and by offering online lending services at least of the fee. Lenders can browse through the different interest rates for the borrowers based upon the credit score they get for investing on the loans and they can divide their net investment into any number of fragments, all having different interest rates, thereby building awesome and alluring portfolios. Online lending has tremendous popularity in India today, much in line with the rest of the world
By the year 2020, India will have more than 1 billion internet users, each having 24/7/365 access to the online loaning facility. P2P lending will also get regulated soon, but RBI will refrain from doing anything that could disrupt the innovation.