 "P2P lending on growth trajectory ahead of RBI guidelines")
The industry is expecting RBI to create a separate category of NBFCs (non-banking finance companies) for P2P lending on the lines of NBFC MFIs (microfinance institutions), which in turn is expected to give a strong footing to P2P facilitators.
“Since P2P platforms do not undertake lending themselves and are mere facilitators, capital requirement of Rs 2 crore, which is at par with NBFCs, could be too high for most P2P platforms to meet. Hence, we suggested RBI create a separate category of NBFCs,” the founder of a P2P company said.
While RBI prepares the blueprint to regulate the sector, for some of the pioneers in the field, business is growing at an average rate of 30-35 per cent per month. This apart, the sector is getting support from a number of bigwigs from the corporate sector.
Delhi-based Faircent, which started operations around 2014, saw almost 10 times growth in loan transactions in the past one year, according to Rajat Gandhi, founder and chief executive officer. So far, the company has raised close to $3.5 million, with one of the investors being Mohandas Pai, former director at Infosys. On an average, there has been 35-40 per cent growth in monthly business for the company, according to Gandhi. The number of loan requests on the platform, too, has doubled between April and September of this year, from 14,746 in April to 29,108 at the beginning of September.
Another P2P lending platform, Lendbox, which started operations about 10 months ago, has already facilitated loans of around Rs 9 crore on its platform. Loan disbursements through the platform have been growing at 30-32 per cent per month, according to Ekmeet Singh, CEO, Lendbox. Further, the company is looking to raise around $3 million from investors.
“Since RBI came out with draft regulations on P2P lending, there has been an increase in interest in the sector from institutional investors as well as borrowers and lenders. We are in advanced stages of discussions for raising around $3 million to fund growth,” Singh said.
Micrograam, a rural-centric P2P firm, is looking to raise around Rs 10 crore from investors, said founder Rangan Vardan. At present, the capital base of the company is close to Rs 2.5 crore. The company has facilitated lending of Rs 21 crore in the past five years. In 2014, the company had roped in V Balakrishnan, former chief financial officer at Infosys, as its chairman.
Hyderabad-based i-Lend, which started operations in 2013, has been going slow in lending, but is expecting a surge in business and institutional lending after RBI comes out with final guidelines on P2P lending. The company is looking to raise around $1.5-2 million from investors.
“At present, we are growing at a rate of 15-20 per cent per month. We are present in three cities —Hyderabad, Chennai and Chandigarh. We are planning to expand to Bengaluru soon. The sector is waiting for RBI guidelines. Once it comes out, institutional investments are likely to increase significantly,” said Shankar Vaddadi, founder and director, i-Lend.
P2P lending is a form of crowd-funding used to raise loans which are paid back with interest. Interest rates on P2P platforms are linked to the risk profile of the borrower.
In a typical rural-centric P2P model, a website publishes a list of loan-seekers from NGOs or MFIs. A prospective lender chooses the borrower of his or her choice, makes payments through an online platform and gets monthly or quarterly payments on the loan, with six-eight per cent returns. The MFIs or the NGOs, which are in charge of monitoring the loans, also take care of disbursements and collections at the ground level, and get six-seven per cent returns. The facilitating online platforms retain 2-5 per cent as their own fees. Thus, the end cost for a borrower comes anywhere between 17 and 20 per cent.
LEAPS AND BOUNDS
- P2P lending is a form of crowd-funding used to raise loans which are paid back with interest
- While RBI prepares the blueprint to regulate the sector, business is growing at the rate of 30-35% per month for some players
- P2P lending is also getting support from a number of bigwigs from the corporate sector
- The number of loan requests on the platform has also doubled from 14,746 in April to 29,108 at the beginning of September
| Cumulative Lending Through P2P platform worldwide | |
| End of Q4 2010 | £ 1 million |
| End of Q4 2011 | £ 2 million |
| End of Q4 2012 | £ 4 million |
| End of Q4 2013 | £ 9.5 million |
| End of Q4 2014 | £ 2.2 billion |
| End of Q4 2015 | £ 4.4 billion |
| Source: Consultation paper on P2P lending, RBI (all figures in GBP) |