P2P Lending In India: It’s just a matter of time

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There is a lot of excitement in the market about peer- to- peer lending. Apparently, Zopa in the UK was the first one to launch the concept through an online platform. Then Prosper and Lending Club came along in the USA. Now with their rapid spread to Asia, one is bound to think of the feasibility of such an option in India.

There are 2 basic things in view here: Indian Borrowing Demand and Indian Lenders’ Risk- taking ability…

According to Globefunder, there is an unfulfilled demand of USD 40 billion in India. VentureWoods sources claim the demand for Home Loans is growing at a rate of over 20% and Personal Loans are growing at 30%! That itself speaks volumes about the sheer inability of traditional financing institutions to meet the demand for loans. Enter, P2P platforms. With their young target market getting increasingly tech- savvy, online P2P platforms seem just about the most convenient lending and borrowing option.

As far as risk is concerned, research says that people are in fact less likely to default on payments if they know each other. So the default rates in P2P lending are less than the banks.
It is rather easy to be indifferent to a faceless bank, but one feels more accountable when peers introduce you to a community, review you and you have reputation to protect. This means more security of money and thus, more peace of mind for the Indian lender.

It’s just a matter of time that this concept will gel in and take off in a big stride.