Unpleasant but fact !!! In 75 years of its working banks could not address more than 15% credit needs of the urban population across the globe. Peer to peer (P2P) lending is a crowdlending method of debt financing. In peer to peer lending, you can borrow and lend money without using an official financial institution as an intermediary. Hence, the peer to peer lending method removes middleman from the process. However, it involves more time, effort and risk than the traditional lending methods.
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What is Peer to Peer Lending?
In peer to peer lending, you can invest your money with people who want to borrow. You will get more interest by lending your money than saving it in any bank account. At the same time, if you are on the other side of the court, means a borrower, you will get money on comparatively lower interest rates. Borrowers could be either individuals or small businesses or start-ups. As mentioned above, there is a high risk involved in peer to peer lending, unlike traditional savings. You can lose your money if your borrower defaults.
Peer to Peer Lending is an online platform where the borrowers and lenders register themselves. You will have to go through the due diligence to participate in any lending or borrowing activity.
Who regulates Peer to Peer Lending?
Reserve bank of India regulates Peer to Peer Lending Platforms. Such platforms come under the category of Non-Financial Banking Companies (NFBCs).
How does Peer to Peer Lending works?
Usually, the profile of a borrower is available on peer to peer lending platform. So that lenders can assess those profiles and decide whether they want to risk lending money to any of the borrowers. Once lender decides to lend out his/her money to a borrower, can fix a tenure up to 5 years. S/he transfers fund from her/his bank account to the borrower’s bank account. And, a lender may ask to submit post-dated cheques as a proxy for the repayment of the loan.
The P2P platform also helps in recovery process; such as repayment follow-ups and if needed, employs recovery agent as well.
Top 5 Peer to Peer Lending Companies in India:
P2P lending in India is in its early phase. Though Peer to Peer lending platform attracted RBI’s attention, so it may speed up rapidly in near future. As of now, following are the top 5 Peer to Peer Lending companies in India:
The LendBox helps in fulfilling the needs of those who have a bad credit score, but they need money urgently. Their operation is smooth and transparent. Also, their support is very responsive.
P2P Lending Platform- Faircent helps the creditworthy borrowers in reducing their cost of loans. And, they help individuals in earning high returns by lending directly to their peers & community. You will get the best rates at Faircent whether you are a borrower or a lender. Because Faircent says, they know that every % counts.
Another P2P platform, i-LEND, believes the availability of credit should not be limited by narrow workflow walls. So, they have made credit available at an affordable rate of interest.
This P2P Platform says, in a country of a billion dreams & ambitions, easy access to credit could, not only fulfil individual dreams; but also ultimately contribute to the growth story of a young nation.
Their mission is to increase the financial inclusion by bringing credit to the common man. Rupiya Exchange provides credit to credible borrowers to reduce their cost of loans.
Peer to Peer Lending is an online marketplace, which connects borrowers and lenders for loans. P2P platform verifies credentials of registered users on their sites. However, it does not assure any loan offers by lenders nor does it guarantee any repayments by borrowers. Understand the risks involved in such transactions, and then make offers or loan requests at your own discretion. Please read their Legal agreements to understand more.