Peer To Peer Lending – The Next Big Thing In India

Aug 5, 2022

As the number of start-ups increases, the fintech business in India is attracting an increasing amount of investment. This has made the fintech space one of the fastest-growing markets internationally.

The Jan Dhan Yojana, the Unified Payment Interface (UPI), and demonetization are just a few of the government-sponsored programs that have eventually facilitated the industry’s expansion and digital economy as a whole.

In addition to COVID-19’s effects, cascading repercussions include the introduction of additional hygiene and safety precautions and the rise in contactless payments.

There are now many more banks and branches across the country than a few years ago. But can banks provide the loans that new firms and people need?

Your money lying idle in your savings account does no good to you as it hardly beats the inflation rate. Instead, you can capitalize on the opportunity that has presented itself and let your money work for you!

P2P lending in India is still in its early phases. However, it is to play a significant role in the lending industry. Finextra (as cited in 2019) predicts that by 2025 it will develop into and play a role in a $10 billion marketplace.

The impact of start-ups on P2P platforms

With India becoming the third largest economy to support the startup ecosystem, the need for seed capital is bound to increase. The fact that Peer to Peer lending Indian platforms are concentrating on the credit requirements of these digital start-ups boosts the confidence of such entrepreneurs. The ability of P2P platforms to finance the expansion of their businesses also result in greater economic advancement and employment opportunities.

Not every startup is bound to secure seed-capital funding through traditional banking channels. This details the prospect of what could have been an excellent business idea. This widening credit gap is exactly what P2P investors require.

Digital startups, these days, are increasingly relying on new lending opportunities, particularly P2P lending. As a result, these organizations have enormous credit availability, which has the potential to have a significant impact on the nation’s economic growth and employment creation.

If the requirements of these start-ups are satisfied, the Peer to Peer lending industry in India will expand at an accelerated rate. P2P lending Indian platforms can be used to borrow money for a variety of personal reasons in addition to for business.

Another factor that will allow the advancement of the P2P industry is “Convenience”. Provided the effectiveness of such lending ecosystems, the use of ever-increasing Peer to Peer lending networks is only bound to grow.

A shrewd investor is the one who seizes the opportunity and that’s where fortunes are created. With the help of LenDenClub’s state-of-the-art infrastructure, 200-point borrower profile check, AI-based lending mechanism, and experienced industry experts working behind the scenes, the opportunity is too good to be missed!

The future of P2P platforms

  • By enabling lenders (investors) to choose the borrowers who best match their risk and reward criteria, Peer to Peer lending will develop as a new investment channel for those seeking higher returns. It also performs better than other currently available alternative investment options.
  • With additional safeguards and better returns, these platforms will continue to grow as a legitimate choice for individuals to make investments.

Significant aspects of P2P lenders

Here are some key reasons why P2P lending will be the next big thing in the financial industry.

Interest Rates

The interest rate is probably the most important factor for peer-to-peer lenders. The P2P financing network can enable the investor to earn a interest rate of up to 10 – 12% p.a*. Many people are forced to look for a workable substitute to get a better return on their money because neither traditional savings accounts nor fixed deposits can beat such high rates of returns.

Ease of Use with User-friendly Platforms

P2P platforms are more individual friendly when compared to mainstream investment products such as equities and bonds. P2P financing is conducted on web platforms with less technical terminology. Anyone, even those without much financial knowledge and limited capital, can invest through a P2P platform. This is something which is not possible with mainstream asset classes. P2P platforms also provide a variety of investment plans that draw in investors of all income levels.

Variety to Serve Different Purposes

The P2P lending mechanism bridges the credit gap between borrowers and lenders. These platforms allow borrowers to borrow money for various purposes. Which leaving the lenders with ample choices to lend their capital among a large pool of various use-cases.

Diversification on Profitable Opportunities

Most P2P lending platforms offer a solution that allows you to diversify your investment across several lucrative prospects. Profitable diversification involves investing all your money across a large number of borrowers, thereby reducing your risk.

Regulated Platforms

All P2P platforms are regulated by RBI. To provide P2P lending services all the platforms require to register for an NBFC-P2P license. P2P lending mechanism promotes alternative forms of financing which has the potential to disrupt the traditional banking channels. Such supervision ensures to create a secured lending environment opening new avenues for business expansion and fundraising.

Conclusion

Of all the recent fintech upheavals, peer-to-peer lending is the most inventive. Individuals looking to borrow are connected with those looking to lend directly through P2P lending platforms.

Peer-to-peer lending is believed to have permanently transformed the Indian financial sector. As long as these lending platforms keep improving their technology and developing and maintaining their lending criteria, lending will continue to be more democratic and rubberised.

LenDenClub’s technology-enabled processes have allowed us to lower intermediate costs, resulting in higher returns for our investors that goes as high as up to 10-12%* p.a consistently. Join our pool of 2 million investors today and start your journey towards financial well-being!

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