This fact surfaced as the Reserve Bank of India (RBI) raised concerns over this type of lending, since it continues to be an informal channel. It does not come under the ambit of the banking regulator and RBI is mulling whether this should change.
The sector has been gaining momentum in the past couple of years and several online players have sprung up, which is why RBI felt the need to looking at monitoring it.
Those in the P2PL segment say that the smaller NBFCs have been tying up with online entities to reduce cost. “If you are a small NBFC, the cost of loan origination can be prohibitive. Typically, if you process 10 loan applications, you end up giving a loan only to one customer. As a result, the cost of credit verification is high. However, on our platform, they are getting verified data and this brings down their cost,” according to a P2PL player.
Another player in the space says, at a time when overall credit in the banking system has been subdued, such tie-ups allow these NBFCs to tap into the customer base that might not be a part of the formal banking channel.
The rate levied on these online platforms can be anywhere between zero and 36 per cent. The maximum amount these allow to be borrowed is Rs 5 lakh.
P2PL allows an individual to lend money to unrelated individuals without assistance from any financial intermediary.