Hyderabad: Peer-to-peer (P2P) lending is becoming increasingly popular across the country. An alternative to traditional credit systems, P2P lending platforms allow people who are not served by the banking system to borrow directly from interested lenders.
The barely two-year-old P2P lending market is estimated to be valued at more than Rs 300 crore. Since 2017, the Reserve Bank of India (RBI) has given approval to as many as 20 P2P firms. Four of these firms are based in Hyderabad.
Radhakrishna Thatavarthi, the founder-CEO of Hyderabad-based SRS Fintech Labs, which owns the P2P platform ‘Oxyloans,’ said the opportunities are many.
Oxyloans announced four new loan products on Wednesday, each targeting different sections of population. Two of them are targeted at women who need money to learn new skills so that they may find jobs.
Oxyloans disburses loans worth Rs 1.3 crore a month. “We have over 1,000 active borrowers and around 150 active lenders at any given point of time. They are spread across the Telugu states and the Bengaluru region in Karnataka,” Mr Radhakrishna said. He added that 80 per cent of the borrowers were IT professionals. He explained that awareness about P2P lending was still very low among both the borrowers and the lenders. ‘The concept has definitely caught on. Every month, the cumulative demand from borrowers is over `20 crore. But lenders who are willing to invest are too few. We hope more and more investors start looking at investing in P2P lending,” he said. Oxyloans’ leadership said they practically had no defaults. Loans of borrowers who are unable to pay them back are usually restructured by finding new lenders. While industry insiders such as Mr Radhakrishna are looking at P2P lending as an answer to India’s credit issues, the RBI has chosen to stay cautious. RBI does not allow any person to borrow or lend more than Rs 10 lakh at any given point of time. Also, a person may not lend to another person more than Rs 50,000 directly.
The platforms had formed an association in 2018 to lobby with RBI against the regulations.
However, it is learnt that the association does not function very cohesively, and there is no consensus. Currently, the entire industry seems quite disorganised, said an insider. Interestingly, people who were once evangelists of P2P in India have exited the space, perhaps because of RBI’s cautious attitude. It is learnt that Shankar Vaddadi, founder of another Hyderabad-based P2P platform I-Lend, does not play an active role in the firm’s daily operations. I-Lend was one of the first P2P platforms in the country.
“He had been active on the scene, promoting P2P for more than five years. RBI announced these regulations only recently. He got tired of waiting for RBI to act. He decided he had spent enough on it and left,” said the insider.
