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Is Credit Lending the Next Big Wave of Indian Fintech?

Peer to peer lending (or P2P lending) is one of the most innovative financial products of recent times. It enables creditworthy borrowers lower their cost of loans and individual lenders/investors to lend directly to their peers and community thereby earning higher returns. Rajat Gandhi, CEO and Founder, Faircent, tells us how this product will disrupt the financial technology.

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Faircent provides a virtual market place where borrowers and lenders can interact directly, without having to go through the traditional financial intermediaries like banks, who have become such behemoths in today’s time that they dictate all terms and conditions for both borrowers and lenders.

Banks have massive overheads, with thousands of employees to pay and hundreds of branches to maintain. To maintain profitability, banks must take large margins on the money that passes through them. Earning out of the difference in interests (what it pays to depositors and what it charges from borrowers) is the main source of revenue for any bank, and has been the key element in the functioning of all traditional financial institutions.

“We at Faircent help eliminate the high margins which banks and financial institutions make on your transactions. Our format allows us to keep institutional charges at a bare minimum and we simply pass on this benefit to you! Here, you can interact directly with fellow borrowers/lenders, negotiate terms and conditions about interest rates, tenure of loans, etc, and strike a deal on your own, without any intervention/imposition from our end. You pay a simple listing fee. Faircent.com does not earn out of your interests and hence you do not pay us out of every EMI in your transactions,” says Rajat Gandhi, CEO and Founder, Faircent.

A marketer, strategist, and brand builder with over 20 years of experience, Rajat Gandhi has leveraged his extensive expertise in online and digital realms to pioneer the concept of online peer-to-peer lending in India and establish Faircent as the largest P2P lending platform in the country.

So is 2017 going to be a big year for Fintech? Pat comes the reply, “It will be as is evident by the recent developments. Demonetisation added impetus to the country’s ongoing digital adoption, leading to a much larger section of population getting acquainted with fintech products. What further drives this trend is the increased comfort and convenience that fintech tools enable for the average customer vis-à-vis traditional financial instruments. These factors are driving the sizeable market traction that the fintech industry, particularly the P2P lending segment, has been witnessing,” he adds.

However, unlike other fintech products, which are largely seen as enablers of services, P2P lending is establishing itself as a highly-lucrative asset class for investors and HNIs in India. “This favour that online P2P lending is finding in the market is one of the prime reasons why the segment will turn into a giant industry by itself in the future. At Faircent.com, we are experiencing massive increase in the scale of business and are planning to gradually increase the gamut of our operations by launching more specialised products and services,” adds Gandhi.

However, the government’s involvement has been extremely satisfactory. It is leaving no stone unturned to increase digital adoption across the country and is also paving the way for the segment’s success through forward-looking guidelines and regulator provisions.

Therefore, credit lending is going to be the next big wave of Indian fintech, according to Gandhi. “Online credit lending is bringing massive disruptions to the industry already, and if you analyze the overall scenario, you’ll understand why. Traditional banking institutions and lenders make use of conventional methods of assessment. The rising NPAs that banks possess are in themselves a reflection of how unviable those assessment techniques are. On one hand, they extend loans to insolvent borrowers, whilst, on the other, promising applicants are often denied credit.”

With the use of state-of-the-art technologies which evaluate an applicant’s creditworthiness on more than 100 parameters, fintech lending platforms like Faircent.com are facilitating easier movement of credit whilst minimizing the risk to the lender. The differentiated business model ensures that lenders have a chance to maximize their returns and diversify their investments across multiple borrower buckets. With an increasing number of lenders and borrowers availing the benefits that such services bring, Gandhi is confident that online P2P lending platforms will be at the forefront of the current fintech disruption.


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