P2P Lending Market Size to be around USD 4 billion in 5 Years: i2iFunding
i2iFunding.com is an RBI registered NBFC-peer-to-peer lending platform in India. It also provides legal and recovery support to investors in case of default by any borrower.
Raghavendra Pratap Singh, co-founder, i2iFunding, tells us more. Excerpts:
BW CIO: Give us a brief about i2iFunding.
Raghavendra Pratap Singh: i2iFunding.com, is an RBI registered NBFC-peer to-peer lending platform in India, which connects verified borrowers looking for unsecured personal loans with investors looking for an investment opportunity to make higher risk-adjusted returns.
i2iFunding started its operations in Oct. 2015 and has raised two rounds of angel investments through SucSEED Venture Partners and various industry veterans like Amit Oberoi, Manish Poddar, and Ashok Mittal.
i2iFunding is much more than a P2P marketplace. Apart from providing end to end loan servicing, i2iFunding thoroughly evaluates the credit risk of each borrower through its automated credit evaluation model and assigns a risk category and interest rate for that borrower.
This helps the borrowers, as well as the investors, to have a benchmark interest rate. In the process, the investors get an opportunity to earn higher 'risk-adjusted returns', while the borrowers get an opportunity to get funded at the lowest cost possible as per their risk profile and market-based demand.
We also provide legal and recovery support to investors in case of default by any borrower.
BW CIO: What is the current market size of P2P lending?
Raghavendra Pratap Singh: As per a PwC report, the estimated P2P lending market size in next five years will be around USD 4 billion (160 times of current lending size).
However, this figure is much less compared to China, where the P2P lending book size is around USD 100 billion indicating the potential of exponential growth in credit starved nation like India.
India currently has 9 RBI registered P2P lending platforms with cumulative loan book of around Rs. 100 crores only.
BW CIO: What are the expansion plans of P2P lending?
Raghavendra Pratap Singh: We currently have investors from across the country. However, borrowers are mainly from few metros. We are looking to expand to all major cities of India in the next couple of years.
We are investing very heavily in technology and will be a technology-driven platform, which will help investors and borrowers transact very easily. We are actively tying up with affiliates, financial advisors, etc. and trying to create network to bring customers through offline market as well, which is huge with lot of potential.
We would also like to add more resources in our existing team especially in technology and sales to meet expansion targets. We have opened one small office in Bangalore and we are planning to add more resources at our Bangalore office. We will open one more office in Hyderabad as we have lot of customers coming from that region.
In next couple of years, we would like to disburse at least Rs. 25-30 crore rupees every month with overall loan book of more than Rs. 300 crores.
BW CIO: What is the credit worthiness of peer-to-peer lending model in India
Raghavendra Pratap Singh: The peer-to-peer lending market in India is still at nascent stage and many new platforms have come up in past 6-8 months.
Only few platforms have focused on improving their credit evaluation process. At i2i, since beginning, our focus has been creating a robust and automated credit evaluation engine. We are analysing borrowers on more than 100 parameters and thousands of data points using advance data analytics model. In past 12 months, we have brought down our defaults to less than 2 percent.
There are many platforms, including big names who are compromising with credit quality for the sake of growth.
BW CIO: What is the scope of growth of the P2P industry vis-à-vis banks and other financial institutions?
Raghavendra Pratap Singh: It would be too early to compare P2P lending with established financial institutions. P2P lending is very small in comparison to banks and other big NBFCs.
However, P2P lending platforms are serving borrowers previously neglected or left untapped by the traditional financial institutions. P2P is gaining traction at very fast pace as it is Internet based and has better reachability, relatively lower overheads and competitive rate of interest, notwithstanding faster processing and more flexibility offered to both users, making them an increasingly preferred choice.
BW CIO: What will be the performance of the loan portfolio in P2P, five years down the line?
Raghavendra Pratap Singh: We cannot predict about the overall performance of loan portfolio in P2P, five years down the line. However, we can say with certainty that only those platforms will become successful who would be able to keep defaults rates lower than industry average. In the end, the competitive advantage of successful P2P platforms would be their credit evaluation process and nothing else.
