How Safe is Peer to Peer Lending Platform in India?

25 April, 2017

Today, the peer to peer online lending has been put forth as an alternative opportunity for investment, mainly because of its greater yielding returns. Most p2p sites offer both secured and unsecured loans to the borrowers. Unlike the conventional bank deposits that offer limited returns, P2P lending offers up to 500% more income.

How does it work?

Just like a bustling physical marketplace, which involves plenty of buyers and sellers, peer-to-peer marketplace revolves around the lenders and borrowers.

Borrowers’ perspective:

• Borrowers can complete the online loan application, in no time. After a bespoke screening of the credibility of the borrower, the loan requirement is posted on the website.
• The borrowers are free to explain the reason why they need the loan; how they will repay the loan; and the required interest rate, with the required documents.
• The lenders bid for the loan and the borrower decides the lender. This concept is absolutely new to India and of course, it is making its most successful attempts.

Lenders’ perspective:

• P2P is certainly more dynamic and reliable option for lending. Within a few seconds, they can complete the registration process and deposit the funds into the account.
• By looking into the requirements of the borrowers, the lenders can make a cherry pick and bid for a few listings, which include a greater interest rate.
• Once approved, the loan amount is credited into the borrower’s bank account within 24 hours of time.
• From the subsequent month, you can expect regular fixed returns (up to 30% p.a.) for the invested fund.

How to minimize risk in P2P online lending?

Diversify – Instead of funding in a single pursuit, the lenders can diversify their money in varied loan types, loan grades, interest rates and loan duration. The successful P2P lenders get an average of 10% fixed return, by reducing the risks through diversification.

Gradual growth – Since P2P concept is new to India, you may not know the nitty-gritty tricks to earn from the investment. Reliable P2P lenders like do not set any minimal limit for investment. Therefore, you can start from as low as Rs. 100 and gradually increase it, when you get the rope of success.

Diligence – Although the documents are checked by the experienced P2P administrators, inspecting it personally reduces the risk. Make sure to check credit history, credibility of the asset documents, bank statements, personal identity, etc., before accepting the offer.

Safety fund:

On, every lender is allowed to spread their fund across multiple loans, to spread the risks. The reliable p2p marketplaces pursue the transparent process, so that the lender and the borrower know exactly what is happening. Further, to make sure the funds are safe:

• Sophisticated online security system is practiced
• TPC or Third Party Company has been appointed as the guardian for the funds deposited in the website
• Monexo is a partner of CRIF Highmark Bureau India, which helps to create a legitimate credit scoring for the borrowers, for reliable predictions.