Peer to peer lending has emerged at a time when the conventional financial system is undergoing a crisis across the world. One may call it a variant of crowdsourcing, P2P services are increasingly becoming popular in all countries where they have been introduced. Here are some reasons for its popularity and why you should also consider it:

1) The small customer rules:big financial institutions like banks prefer big business deals. This often leaves the smaller requirements neglected. Example: you want a small personal loan, the terms and conditions are much tougher than those for a business loan or a home loan. Try borrowing Rs.50,000 from a bank and you will see the complexity! But in P2P, it is all about such small transactions.

2) Small and Short Term Investments: Conventional investment options usually have rigid terms and conditions. Thus a Fixed Deposit or even a Mutual Fund will have a minimum maturity period, often along with a minimum stipulated amount. P2P offers flexibility in terms of amount and time period for your investments.

3) Best Interest Rate: Well, how many investment or borrowing options can you think of that allow you to bargain on the interest rate? In addition, since there are no intermediaries earning out of your transaction, both borrower and lender in P2P get the best possible deal.

4) Transparency: Fine prints, sub clauses, annexure… these make engaging with conventional financial institutions like stepping in a legal quagmire. And you are at the receiving end of all complexities. In P2P, you get to interact directly with the other party, agree on terms and conditions (within certain boundaries), and then set the contract accordingly. It is simple, transparent, and you are in control all the time.

5) Diversification of Investment: irrespective of how small your investment amount is, you still get to spread it across borrowers in P2P forming a sort of hedge. It’s like having the features of a large investment for a small one. P2P thus offers the best of both worlds for small investors.

The advent of new age services like P2P has empowered communities at the grass root level at a time when conventional financial institutions failed to address their needs.. Faircent, the pioneer P2P service in India also allows customers to interact within their own choice of communities, thereby recreating the cultural tradition of financial transactions in a modern e-commerce setup. No wonder that more and more people across the world and now in India are embracing P2P.