HomeMedia Center14% return in a year: P2P lending catches investors’ eyes

14% return in a year: P2P lending catches investors’ eyes

An average 12-14 per cent return in a year! Sounds exciting? This is what lenders on P2P lend-ing platforms have earned in a pandemic-stricken year. Data from P2P lending platform LenD- enclub shows as many as 4,50,000 new lenders joined the platform in FY21 compared to 50,000 registered lenders at the end of FY20. With this, the total registered lenders on its platform stood at 5 lakh, a jump of 900 per cent in a year.

Faircent, India’s first P2P lending platform to have received the NBFC-P2P licence by the RBI, had 2 lakh lenders at FY21-end. The platform disbursed Rs 1,145 crore loan in FY21 compared to Rs 920 crore in FY20, a jump of 24 per cent. The total loan book size as on date comes in at Rs 2,250 crore.

Bhavin Patel, CEO & Co-founder, LenDenClub claims to have recorded 739.10 per cent growth in disbursement in FY21. The company did not share the loan book size.
Rajat Gandhi, Founder & CEO, Faircent informs the average portfolio return for the lenders stands at 12-14 per cent for a holding period of one year. For LenDenclub one-year return for calendar year 2020 stood at 13.47 per cent. Patel explains that return on investment (RoI) is dif- ferent from net returns. “If RoI is 20 per cent and the non-performing asset at 5 per cent for the 12-month loan tenure, then the net RoI will come to 15 per cent. After factoring in 2 per cent platform fee, the net return will come to 13 per cent,” he says.

P2P lending platforms act as a conduit between lenders and borrowers. Borrowers could either be individuals or micro SMEs. Anyone with surplus capital looking for a short-term investment may consider lending money to borrowers. There are over 23 lakh borrowers on Faircent’s plat- form, while 12 lakh on LenDenclub’s platform.

While the P2P lending segment is regulated by the Reserve Bank of India, one must be careful about the risks involved. Just like any other form of lending, P2P lenders have to manage the risk of default. Faircent reported 6-7 per cent NPA on its books, while it was 3.94 per cent as on FY21 for LenDenclub. The platform reported 5.82 per cent NPA in FY20.

P2P lending is not a mass product. It is for sophisticated investors. We have a minimum cap of Rs 50,000 investment for a lender so that the money can be diversified among large number of borrowers from varied risk buckets, location, gender and age-group etc. We advise investing at least Rs 2-3 lakh to earn returns,” says Gandhi.

P2P players have been in existence since 2012, but the RBI came out with guidelines in Septem- ber 2017, to convert P2P players into NBFCs by issuing NBFC-P2P licences. There are 21 NBFC- P2Ps in India.
As per RBI regulations, one can invest up to Rs 50 lakh across P2P platforms. The minimum amount is Rs 25,000. The RBI has specified that the tenure of a single loan cannot be more than three years. Exposure to a single borrower cannot go above Rs 50,000. For example, if you have Rs 50 lakh to invest, you need 100 borrowers across platforms.

Credit:https://www.businesstoday.in/money/investment/14-percent-return-in-a-year-p2p-lending- catches-investors-eyes/story/437764.html

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.



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The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or lending simple interest. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any lending decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ lending amounts.

*This is an annualized yield and is subject to the maximum FMPP tenure, which is 5 years. P2P lending is subject to high risk and may cause an entire loss of principal.

*P2P lending is subject to risks. And lending decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of simple interest received by lenders

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