HomeMedia CenterThe new moneylenders! Not just banks, look who is into lending money online now

The new moneylenders! Not just banks, look who is into lending money online now

The new moneylenders are smart. They are millennials, not banks, armed not with complex rule books but gadgets – smartphones or computers – and like to play by rules, thanks to emerging online social lending and borrowing/peer-to-peer marketplaces like LenDenClub, SaveIN etc.

Remember the greedy moneylender Sukhilala of Nargis-Sunil Dutt starrer Mother India? Well, the moneylending business has undergone a sea change since the times when lenders like Sukhilala literally existed everywhere. Not just commercial banks or RBI-regulated NBFCs, a new class of digital platforms are helping millennials become new moneylenders and earn cool returns on their investments.

The new moneylenders are smart. They are millennials, not banks. Armed not with complex rule books but gadgets – smartphones or computers – they like to play by rules, thanks to emerging online social lending and borrowing (peer-to-peer) marketplaces like LenDenClub, SaveIN etc.

LenDenClub boasts of a registered base of around 6.5 lakh investors. Even newcomer SaveIn app has witnessed around 50,000 downloads, out of which 70 per cent users comprise the millennial population who are more comfortable transacting digitally and prefer having digital records for such transactions.

A recent report by LenDenClub found that young and tech-savvy Indians are much ahead of the previous generations when it comes to borrowing or even using the platform as lenders. Millennials belonging to the age group of 21-30 years were the most active as lenders (54%) on LenDenClub platform. This was followed by the cohort belonging to the 31-40 years group, accounting for 33% of lenders.

Interestingly, the report said India’s ‘tech capital’ Bengaluru, topped the chart in terms of the highest number of lenders, followed by Mumbai, Hyderabad, Pune and Chennai. The largest number of people having the highest credit demand was also from Bengaluru. The report said that salaried professionals ranging from CXOs to mid-managerial levels topped the chart as investors on the platform. Also, Rs 1.81 lakh was the average investment amount on the platform while Rs 50,000 to 1 lakh was the most preferred amount among lenders.

Bhavin Patel, Co-founder and CEO of LenDenClub, said the Covid-19 pandemic has accelerated the digital penetration across every industry and the lending sector has also seen a transformation beyond imagination. During the global health crisis, millennials also actively participated as investors availing P2P lending as an aspirational asset class offering lucrative returns.

Jitin Bhasin, Founder and CEO of SaveIN told FE Online, millennials are the most digitally active smartphone audience and the highest contributors to the working class in India, be it salaried or self-employed individuals. “Being highly active in social circles, millennials transact most among each other for short term loans and the ticket size is around Rs.7000 mark,” he said.

But, is it safe to lend online? And what about returns?

“As regulated by RBI, peer-to-peer lending platforms can’t guarantee returns. It carries investment risk similar to other investment instruments like Mutual Fund, FD and Debentures. However, the risk is diversified through very low amounts lent (as low as 500 per investor to any borrower), it does not affect portfolio returns,” LenDenClub told FE Online.

According to Bhasin, the Covid 19 pandemic ushered in a new era of digital transactions as people feared transacting in cash. During the pandemic, people have been relying on each other for emergency and unplanned expenses and that is when digital transactions on SaveIN saw a boost.

On the basis of the returns seen in the last financial year, LenDenClub said an investor can expect average net returns of an 13 per cent p.a.

“An investor can expect net returns of 12% – 15% p.a. . However, it varies from investor to investor. The key to investing on a peer to peer lending platform is diversification – lending out small-ticket loans (generally Rs 500) per borrower. Given the risk is spread out, the higher lending rates make up for an average of 12-15% p.a,” LenDenClub said in response to a query by FE Online.

Credits: https://www.financialexpress.com/money/the-new-moneylenders-not-just-banks-look-who-is-into-lending-money-online-now/2297761/

 

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.

About

Lending

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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