Vivek Kumar

Abhishek Chechi
GROUP 06 Purnima Tiwari
Aditya Rathore
Rashmi Sharma

Study on future growth of p2p

lending on the perspective of
indiastack
I P2P Lending (Peer-to-peer Lending): Practice of lending money to individuals
& businesses through online services matching lenders to borrowers.
N
Lenders get higher returns while Borrowers borrow money at lower interest
T rates.
R Interest Rates are set by lenders who compete for the lowest rate on the
O reverse auction model or fixed by the intermediary company.

D Characteristics:

U Sometimes conducted for profits.

No necessary prior relationship between lenders & borrowers.
C Intermediation by a peer-to-peer lending company.
T Online Transactions.
I Lenders may often choose which borrowers to invest in

O Low overheads & Services cheaper than traditional financial institutions

N
I Services provided by peer-to-peer intermediaries:
N Online Investment Platforms.
T Development of credit models for loan approvals and pricing
R Verifying borrower identity, bank account, employment, and income

O Performing borrower credit checks and filtering out the unqualified

borrowers
D
Processing payments from borrowers and forwarding those payments to
U the lenders who invested in the loan
C Servicing loans, providing customer service to borrowers.
T Payment Collection from borrowers who default.
I Legal compliance and reporting

O Finding New lenders & borrowers.

N
 HISTORY OF P2P LENDING

Zopa, founded in Feb 2005 (the United Kingdom) first P2P lending company.
The P2P lending industry started in the US in Feb 2006 with the Prosper
marketplace followed by the Lending Club.
Rapid growth – Covering large markets of China, the United States, and Europe
Funding Circle (2010) - First significant peer-to-business lenders focussing on
business loans was launched.
Pioneer (UK) and first mover (US) benefited from the first-mover advantage In 2018 -
Europe - 57 % market
North America - 96% market capture
China rapidly became the largest market for P2P lending
Shrinked by 40% between 2017 and 2018 due to new government regulations
40,000 small businesses have been helped across the world.
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 ADVANTAGES

Biometric Identity Database - enables identity verification using a combination of

Aadhar and physical biometrics of the person
Simplified Payments system - enables instantaneous small amount transactions
without the need of cash or middle man
Digital Payment interoperability - enables the transfer of funds between two
accounts in different locations.

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 DISADVANTAGES

Lack of Systems to maintain and run - changes in Aadhar have to be done

manually, and may take upto a week
High failure rates
Cost banks and payment companies to enable free P2P transactions - INR 2000
Crores approved by government for FY 2022-23
Problems with data security

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Indian regulations, strict or relaxed ?

P2P entities as NBFCs

Ambiguous definition of P2P lending
Net-owned fund and leverage ratio
Limit on lending
Exempting non-institutional lenders from regulation
Are NBFC-P2Ps intermediaries for banks?

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Thank you
for listening!