InvestorQ : How does the P2P platform help borrowers? Aren’t there enough banks to lend in India?
Sadaf Khan made post

How does the P2P platform help borrowers? Aren’t there enough banks to lend in India?

Pratik vyas answered.
3 years ago

While there are a number of banks as well as non-banking finance companies (NBFCs) in India, fact is almost half the India’s total population is unbanked. Additionally, banks and NBFCs don’t prefer lending to individuals with no credit history or those who don’t have any record of transacting with banking and financial institution.

It is exactly these limitations that the P2P lending market is taking advantage of. Indian traditional banks have grown at a dismal rate due to mounting losses, tougher regulations, and years of under-investment in technology and modernisation of existing infrastructures.

In stark contrast to the traditional banks, the peer-to-peer lending model enables borrowers and lenders to interact directly with each other through an open and transparent online marketplace, without the involvement of banks or financial intermediaries.

Those borrowers who are registered on a P2P lending platform simply need to provide their funding requirement along with their personal and financial details. These details will help a lender decide whether they want to lend their money or not.

One or more lenders can fund a single borrower’s loan. On the borrower’s part, he or she has to repay the lender on a monthly basis. Thus, P2P ensures ease of borrowing as there are no middle men involved and resultantly no extra margins to be paid to anyone. Hence, borrowers can access credit at lower costs, while lenders can earn extra income on their otherwise-idle funds.

P2P lending companies are growing at a greater pace than traditional financial institutions due to the development of advanced technological setups. These tech-driven P2P lending technologies are helping eliminate long delivery processes.