Less than a year old peer to peer lending program, Faircent, has secured an undisclosed amount of investment within an EV of $4 Mn from Devesh Sachdev and Ashish Tiwari, entrepreneurs of Blend Microfinance.
Faircent helps in eliminating the high margins which intermediaries like banks and financial institutions make on our transactions. The post P2P Lending Platform, Click here to read full article
Everybody has lean patches their life when they will be compelled to take a loan and straighten out obligations and expenses until everything falls in place and assumes a normal flow. Unfortunately, a large proportion of people end up relying on credit cards during stressed times because all they need to do is swipe a card and collect cash.
Imagine if you could get rid of the bank and directly lend to those in need. You could potentially arrive at a rate like 13%, which is hugely beneficial to both lender and borrower.
The last couple of years have been tough for the Indian middle class. Economic slowdown coupled with ever rising inflation has squeezed the finances of every such household. The last couple of decades had witnessed a credit lead growth of the economy, where the availability of cheap credit helped fuel demand generation in the economy. Much of this demand generation was from the middle class which availed home loans, auto loans, personal loans, or relied on credit cards for pacing out their consumption needs.
One of the main reasons for the growing popularity of P2P lending in developed economies has been the rate of returns that investors have been earning. Here is a comparison of the rate of returns from the two major economies, UK and USA, which shows why P2P is gaining such popularity.
UK
In the UK, the top deposit rate for 6 months tenure is around 1.1% while that for a 2 year period is 1.6%. For 6 month fixed rate bonds, the returns are around 0.9-1.1%, while the same for a 2 year period is around 1.35-1.6%.
When you put money in a bank, you get an average return between 4-8% on your deposits and when the banks lend money it lends anything between 18-36%! In the entire process,
