P2P Lending - India vis-a-vis Global Players

P2P Lending: The India Scenario

The idea behind peer-to-peer lending was to create online connect between lenders and borrowers thus saving time and enabling better transaction for both. Credit-challenged borrowers, in need of immediate cash got the power to avail loans at less credit rates. Cash rich lenders, in turn got an option for quick investments. Standing in a long queue and filling up pages after pages (loan forms), sure can be a tedious task! Thus a smooth and easy loan process was definitely a welcome break.

Last decade witnessed the advent of peer-to-peer lending in the Western market and it soon gained traction. Today, some of the top P2P lending companies operate out of USA and Europe. The concept of P2P lending in India is relatively new and is yet to create a strong foothold. Over the last few years, multiple companies have come to offer peer-to-peer lending services in India and are witnessing a fairly good response. Keeping in mind the warm response it has received in the Western world, it is just a matter of time that it will pick up pace in India as well.

The Key to Success

The Indian market is huge and immensely chaotic, but has superb potential. The key lies in cutting into the chaos and identifying the potential. The initial steps should include educating consumers and spreading the awareness of peer-to-peer lending. A financial market as regulated and dominated by legacy like India would require P2P lending companies focus strongly on their customers. The need is to highlight its benefits and unique advantages that can be of great help to the users.

With high bank rates and strict loan margins, it often gets a tad bit difficult for borrowers to avail bank loans on an urgent basis. It’s in these scenarios that peer-to-peer lending can help borrowers avail quick loans. As most of the P2P lending platform enables direct interaction between borrowers and lenders, loan settlement becomes an easy process. With the power to negotiate for the best interest rates, the borrowers are ensured of loans at good rates and fast as well.

On the other hand, investors with an outlook to invest can explore multiple investment options with peer-to-peer lending. With the ability to select multiple creditworthy borrowers, investors are now assured of fixed monthly returns.

 The Road Ahead

Introducing a new idea in a market like India is more than a day’s work. Thus peer-to-peer lending would definitely take some time to gain visible grounds in this market. However the real test would be the intensity of acceptability amongst the people.

Having said so, India is already home to such players and i-lend being the premier among them, has been the forerunner in introducing the concept of P2P lending in India. Through a simple online platform, i-lend enables borrowers and lenders to interact one-on-one and discuss loan amount and interest rates before finalizing the agreement. This is a huge opportunity for both the borrowers and lenders, as it gives them complete freedom to negotiate fairly. This definitely indicates towards the probable future of peer-to-peer lending in India.

Though it might take time to establish itself as a solid process, it will definitely play a major role in shaping the financial future of the country. After all, it’s seldom that users get a chance to break free of the shackles of stringent processes that seems to take ages to work!

 

Summary

P2P Lending has gained a solid traction in the Western market and it would be a matter of time before it sets a solid foot in India as well. However, the highly regulated market in India would make things time consuming. Having said so, P2P lending would definitely provide a mechanism enabling lenders and borrowers mutually strike a beneficial deal. Peer to peer loans are the easiest to avail with justified interest rates. P2P lending also enables investors earn a profitable margin by investing in credit worthy borrowers.