The desire for ‘quick loans and quick returns’ may be heavy, may cause huge losses

The report of market research company Industry ARC states that the size of P2P lending in India will grow at the rate of 21 to 25 percent by 2021- 2026.

The report of market research company Industry ARC states that the size of P2P lending in India will grow at the rate of 21 to 25 percent by 2021- 2026. At this pace, by 2026, this business will be worth $ 10.5 billion.

Lump sum deposit of Rs 40,000 for school admission of daughter (Deposit) The demand made Ashish Singh sleepless. COVID-19 ,Covid-19 Pandemic, loan during (Loan) Delay in repayment affects credit score (Credit Score) dropped it. For any bank or non-banking financial institution ie NBFCs, those with a bad credit score top the no-no list. For people like Ashish, whom financial institutions do not offer loans, P2P lending platforms i.e. Peer to Peer Lending makes quick loans. This is what is making the business of P2P lending successful in India.

The report of market research company Industry ARC states that the size of P2P lending in India will grow at the rate of 21 to 25 percent by 2021- 2026. At this pace, by 2026, this business will be worth $ 10.5 billion.

What is P2P Lending?

There are around 20 fintech companies in the country, which provide peer to peer platforms. These platforms work to connect the lender and the borrower. Here no bank or institution gives loan, but the loan is given only with the money of the investors. Investors are those who give their money to these platforms to get returns on their surplus funds. They get 10-18 per cent returns on these platforms, which is much higher than all the small savings schemes.

Why take loan from P2P platform?

Bhavin Patel, co-founder and CEO of peer-to-peer lending platform LenDen Club, says that individuals in the age group of 23 to 45, whose monthly income is around Rs 12,000, are the most flocked to their platform for loans of Rs 5,000 to Rs 25,000. Huh. Emphasis on CIBIL score without paperwork, banks should refrain from giving small loan amount without collateral. But those whose money is being given on loan, if they are being promised a return of 10 to 18 percent, then it is recovered from the interest of the loan given. Interest of 6.5 and 9 percent will be shown on their website, but the profile is prepared according to the repayment capacity of each borrower. On this basis the interest is fixed.

A loan of Rs 10,000 can be availed at an interest rate of 6.5 per cent and also at an interest rate of 15 per cent. Some of the lenders and their interest rates are as follows – Transaction Club is starting interest at 6.5 per cent. One can get a loan of 25,000 to 5 lakh rupees, which has to be repaid in 3 to 24 months. For this a registration fee of Rs 750 will have to be paid. Faircent is giving a loan of Rs 10,000 to 5 lakh at 9.99 percent, this loan customer will have to repay this loan in 6 to 36 months. The loan interest rate in Lendbox starts from 12 percent, while OML p2p is giving loans at around 11 percent.

P2P regulation

Peer to peer platform has to take P2P- NBFC license from Reserve Bank. They should have Certificate of Registration. The modus operandi of their working comes under the Reserve Bank. An investor cannot deposit more than Rs 50 lakh in such a company. At the same time, a borrower cannot take a loan of more than Rs 10 lakh. The P2P platform cannot give a loan of more than Rs 50,000 to an individual. This is the mechanism under which all the money of a person is divided among different people and his risk is reduced. But how risk-free the loan transaction is, that is the big question.

Jitendra Nehra, founder, Superfine Microfinance, explains that 4 to 10 percent of loans in P2P lending platforms are in default. Companies make a profile of their ability to repay the loan. But the borrowers of small loans are associated with temporary employment. These people are unable to repay the loan many times due to the stagnation of their source of income. It is also seen that to repay one loan, second and third loan were taken and a mountain of loans stood.

Money 9’s advice

P2P platforms act as troubleshooters for loan borrowers when there is an urgent need for money. The job of the borrower is done in minutes. But those who invest their money here in the greed of high returns, they need to be careful. In case of default on this type of loan, there is a fear of loss of money. Therefore, do a background check of the platform to which you will give money to give loan.

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