Peer-to-peer (P2P) lending platforms offer themselves a simple key to borrow money for short-term necessities. This shall include buying consumer electronics, medical emergency, business loan, home renovation, repay credit card dues, travel loan, or any other such requirements.
It is quite feasible to borrow from P2P lending platforms when compared to conventional personal loans from banks and NBFCs as process and payment of the loan amount is speedy at P2P lending platforms as compared to applying for a personal loan from the bank.
There are mid-age salaried and self-employed individuals who are involved in lending on P2P platforms to earn huge returns by taking higher risks as compared to financial assets that involve mutual funds, equities, etc.
The reason behind this is that for every borrower, there has to be a person on the other side wanting to lend and earn an interest. 2018 has been the year that showed major growth in P2P lending, in the month of January overall P2P lending was in the range of Rs five to six crores and at the end of December, it increased to Rs twenty to twenty-five crores. The reason for such a high raise in lending is that after being governed by the RBI then receiving the NBFC status and the knowledge of the alternate mode of lending and borrowing amongst the consumers, the P2P platforms have witnessed a high paced growth.
What do we understand by P2P lending?
P2P lending platform is a way of connecting borrowers with individual lenders, who come together to meet the borrowers’ loan necessities. Such, borrowings from Peer to peer platforms are unsecured loans and interest rates are greater for borrowers as compared to banks and Non Banking Financial Companies. Some of the examples of P2P lending platforms are Faircent, OMLP2P, Lendenclub, Cashkumar, Rupeecircle, Lendbox, etc.
The amount for borrowings and term of the loan are different for P2P companies. For example, on OMLP2P platform, borrowers can call for loan amounts between Rs twenty five thousand to Rs ten lakhs. The minimum loan term is three months and the maximum thirty six months.
To register as a borrower, you need to register on Peer 2 Peer platform by filling an online application form, pay the non-refundable one-time registration fees of Rs hundred to Rs thousand and upload the scanned copies of documents. P2P players may also seek borrower’s social media profile links to assess profile, social behavior, job stability and other relevant points.
The intrinsic problem with P2P lending platforms is that there is simple accessibility of loans, and most millennial are now borrowing for small requirements from these platforms and increasing risk to unsecured borrowings.
Non-Banking Financial Company (NBFC) is that kind of financial institution which offers various financial and non-financial services to business enterprises, individuals, entrepreneurs, etc. NBFC License must be taken from RBI
Peer-to-peer lending platforms offers a simple key to borrow money for short-term necessities. This shall include buying consumer electronics, medical emergency, business loan, home renovation, repay credit card dues, travel loan, or any other such requirements.
The procedure for taking over an NBFC is being laid down by the RBI. Takeover of an NBFC refers to purchase of one NBFC by another company. Only registered NBFC under the Act shall undertake to acquire the control of another NBFC.
NBFCs do not have those prosperities, which means that the NBFCs need alternate sources of the money supply, which are higher than the deposits taken by banks, where the interest rate offered is between 4%-6%.
Collaboration means coming together for a shared goal. India has more than 9000 active NBFC but barely 954 the NBFCs have book size more than 40 crores. Rest 8460 NBFCs are only able to meet the regulatory cap of the loan book of INR twenty Million.
RBI and other related regulators set rules and regulations, which keep on altering because of changing needs and circumstances. It is important for the NBFC management to know about what to do and how to do it, and there is a strong need to keep abreast of the times.
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