Why we built the Secondary Market?18 September, 2019
Monexo's unique Secondary market feature is a ‘first for Peer to Peer lending in India' which allows existing investors to sell the loans they have already invested in to other investors who are also lending on the platform.
To understand our Secondary Market, let us take a step back and delve into what our Primary Market offers. All fresh borrowers who are screened, risk assessed and deemed eligible for a loan are listed in the Primary Market for investors to lend to them. Monexo's borrowers presently are only salaried, creditworthy individuals - majorly sourced in T-1 metros in South India. Borrowers are also met by Monexo physically at both their home and office as part of the screening process.
When you invest in loans on Monexo's Primary Market, like most fixed income asset classes, you are entering into a contract with borrowers to lend your funds to them over a period of time. At Monexo, this period can vary between 6 months to 36 months. Borrowers repay in EMIs (principal + interest) every month.
Hence, once you invest/ commit funds to borrowers in Monexo's Primary Market, you need to stay invested. You cannot withdraw the amount invested in loans before a) the loan tenor/maturity period is over or b) the borrower prepays/forecloses the amount you have lent to him.
However, the Monexo Secondary market gives you the opportunity to take an exit from your entire portfolio on Monexo - if and when the need arises. When a successful sale happens, it provides an instant exit for the seller and the buyer gets an opportunity to invest in loans with an existing borrower repayment track record. A win-win for both!
Why we built the Secondary Market.
1. We understand liquidity is important to you.
Life is not always certain. We understand that as an investor, there may be sudden scenarios, when you may need flexible access to funds invested in Monexo.
Through Monexo's Secondary Market, you always have the peace of mind that you have the opportunity to exit and redeem your investment - if the situation so demands.
Presently, investors on Monexo with a portfolio of at least Rs 5 lacs can participate as a seller. Anyone with investible balance can be a buyer.
2. We are adaptive to your perception of risk.
As an investor, as time progress, your risk appetite could change. To lower overall portfolio risk, you may wish to sell a small portion of the higher risk loans you are holding. Alternatively, you may want to sell some of your lower-risk loans and use the proceeds to buy fresh loans with a higher interest rate in the Primary Market.
Our Secondary Market, by enabling you to alter your portfolio mix, enables you to smartly experiment & optimize yields.
3. Expanding choice for conservative investors.
As investors in the secondary market sell only the performing loans in their portfolio, this presents buyers the opportunity to invest in borrowers with an existing repayment history.
This enables conservative investors with lower risk appetite to confidently park a part of their P2P corpus in secondary market loans which typically carry lower credit risk - especially if the borrower repayment track record extends over several months.
4. Two marketplaces = Higher loan inventory.
With two marketplaces, instead of just the Primary marketplace, investors who wish to invest in loans on Monexo now have increased choice. They can invest in a combination of fresh borrower profiles and also invest in borrowers with an existing repayment history through the Secondary Market.
How can investors participate in the Monexo Secondary Market :
To buy loans in the Monexo Secondary Market, you can either be an existing investor or a new investor. To sign up as a new investor, please visit https://www.monexo.co/in/lenders. Our minimum initial investment amount is INR 1,00,000 (Rs 1 lac). A minimum commitment of INR 1 lac is necessary as this enables portfolio diversification and risk mitigation. If you wish to do a SIP mode investment with us, you can start with Rs 50,000 subject to a monthly top-up of at least Rs 5,000.
Existing investors with an investment portfolio of at least INR 5 lacs will be able to sell the performing loans in their portfolio.
With our Secondary Market innovation, Monexo continues to pioneer the Peer to Peer lending industry in India enabling investors to confidently participate in this new asset class.