P2P players are increasingly looking at more secure product partnerships, aiming to introduce asset-based investment products with Faircent being the first to do so.The platform has tied up with Mumbai-based on demand biketaxi service Baxi to provide twowheeler loans to drivers.
Besides auto loans, Faircent also plans to introduce trade loans to distributors and retailers of consumer-durable products and other such companies. Similarly, other players like LendenClub and i2iFunding aim to offer investment products like auto loans and invoice discounting options on their platform.
“We have disbursed loans to over 25 drivers many of whom have two jobs, some of them peons.The loan amount is usually `50,000 for a lower interest rate of 14-15% and can be repaid over a three-year period. We aim to disburse loans to at least 200 drivers through the Baxi partnership,” said Rajat Gandhi, founder of Faircent. Since August, Faircent has seen a monthly loan disbursal amount of up to `2 crore. According to Bhavin Patel, cofounder of LenDenClub, internationally peer-to-peer players have gone on to offer auto loans, home loans, cross border financing loans, risk finance and consumer and electronic durable loans.
“We have created two-wheeler and four-wheeler loan products and discussed how to assess them. We have even discussed partnerships with dealers but will wait for RBI regulations to be announced, even though we don’t expect to hear anything pertaining to secured loans. These are early stages in India, just a matter of few months before we offer auto and other similar secure lending options,” said Patel.
Venture Catalysts-funded i2iFunding plans to offer bill-discounting options and then follow up with auto-loan products on the platform. The platform is currently in talks with an NBFC to offer bill discounting to its existing user base. Bill discounting loan sizes could range from `50,000 to `20 lakh, offering an interest rate of approximately 15%.
“With bill discounting we have an idea of the kind of default rate to expect since we will be leveraging data from our existing user base. With auto base. With auto loans there are more legal hassles in case of default since it’s a riskier segment but we aim to offer both of these options early 2017,” said Vaibhav Pandey, cofounder of i2ifunding. However, Sanjay Swamy, managing partner of Prime Venture Partners and an investor in the fintech sector, expects negligible default rates for two-wheeler loans, since transportation is essential.
“This is a natural progression and a logical starting point for P2P products. However, it’s important to distinguish between essential versus discretionary assets. Also with Aadhar, eKYC and IndiaStack access to credit will be easier for many more people than in the past,” Swamy added.
Credit: Times of India