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Capitalizing on technology, the Peer-to-Peer lending platforms create a virtual marketplace that connects the investors with borrowers, making borrowings a digital and seamless experience. With the massive adoption of Financial Technology, the P2P lending platforms are making waves in the financial industry with an average annual growth of 32.5% in the USA between 2014 2019. UK, on the other hand, is also among the top five players with a total loan book value amounting to $11,223.98 million as of June 2019. 

While India is still in its nascent stage with a market size of about 200 crores, the Indian P2P lending industry is looking forward with high hopes projecting a $4 5 billion industry size by the end of 2023. 

While the industry is yet to mature, it has the potential to grow by leaps and bounds in the upcoming years. With growing interest among the borrowers seeking out alternative modes of financing, the inherent gaps and a rigorous application procedure for traditional financing modes, the P2P lending platforms have already created high volumes of investment and the opportunities are still growing. 

Although the potential for fraud and inability to confirm the non-financial information of borrowers remain arguably the biggest weakness and hamper growth in P2P finance, the P2P lending platforms have kept their default rates in check. Upholding a stringent credit assessment criterion allows such platforms to maintain a low default rate eventually safeguarding the interests of their investors. 

Industry Outlook

As per the report by the European Banking Authority, the increased penetration of the internet, globally, is the biggest driver fuelling the industry’s growth. Further, the P2P Lending in Asia-Pacific region or more specifically, the emerging economies such as India and Japan are expected to grow at a significant rate with a number of small start-ups and individuals seeking alternative financing modes for funding their requirements. Globally, the Peer-to-Peer Lending market is poised to grow at a CAGR of over 25.4% surpassing a market size of USD 820.70 bn by 2025. 

The domestic factors such as the ongoing Covid-19 pandemic, NBFC defaults, and the bad loan crisis in the Indian financial system has created a widespread lack of credit in the system. This has put the Indian P2P lending institutions in a favourable spot paving a roadmap for rapid growth of P2P lending industry in India. 

The domestic factors such as the ongoing Covid-19 pandemic, NBFC defaults, and the bad loan crisis in the Indian financial system has created a widespread lack of credit in the system. This has put the Indian P2P lending institutions in a favourable spot paving a roadmap for rapid growth of P2P lending industry in India.

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