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P2P Lending

Friday, May 19, 2017

A marketer, strategist, and brand builder with over 20 years of experience, Rajat Gandhi is the Founder & CEO of Faircent, India’s largest peer-to-peer lending platform.  As one of the earliest Internet professionals in India, Rajat 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.

Through Faircent, Rajat has been playing a crucial role in extending the benefits of financial inclusion to India’s traditionally underserved populace and democratising debt by enabling access to cheap and fast credit for borrowers including the SME/MSME segment. In conversation with Dominic Rebello, Rajat reveals the aim behind starting, which was to build a tech-enabled platform that brought lenders and borrowers directly in contact with each other, thereby removing traditional intermediaries like banks and other financial institutions

What is the concept or idea behind
The idea of was born from a personal experience. A colleague used to borrow small loans from multiple friends to fulfil his needs at a specific point of time. For example, he once wanted to buy a motorcycle and had posted on Facebook requesting his friends and family for a portion of the funding, and in a week, he was riding his motorcycle to office. This incident, coupled with my knowledge and experience in building online exchanges previously led to the creation of

The idea was to build a tech-enabled platform that brought lenders and borrowers directly in contact with each other, thereby removing traditional intermediaries like banks and other financial institutions. With more than 70,000 registered borrowers, 8,000 registered lenders and loan disbursals worth Rs. 15+ crore so far, we feel we are on the right track.

How has Peer to Peer Lending emerged as the new alternative Asset Class?
Traditional investment instruments often demand investors to bet between playing safe and taking risks. This is especially true when you must choose between asset classes like equities or debt. Investing in equity requires in-depth knowledge and financial sophistication to assess the correct entry and exit time, as well as the accurate valuation of the stock.

P2P lending offers the advantage of fixed returns not susceptible to market turbulence, over traditional market-linked investments. Further, P2P lending is like investing in debt; the capital risk is lower, and there exist ways to mitigate it. In case a loan is defaulted upon, investors can pursue legal recourse against the borrower. Such a provision is not possible by investing in stocks and bonds.

P2P lending is consistently delivering net returns upwards of 18% p.a. As per the latest Research & Analysis Report April 2017, a diversified portfolio with investments of 5 lakh and above can stabilize at 18% to 22%.

Add to this the fact that since borrowers repay every month (principal & interest), there is a steady cash flow coming in every month. Reinvesting this monthly inflow means an opportunity to earn even greater returns.

Any expansion plans?
We have only just touched the tip of the iceberg. As the largest online P2P lending platform in India, we are responsible for many firsts in the P2P lending industry. We were the first platform to tie-up with Baxi to provide collateral-based loans to its drivers. Recently, we introduced an Escrow account service under the trusteeship of IDBI and are soon launching automated investment. We are the only company to have Android and IOS apps for lenders. Greater transparency and efficiency in data and ease of use for customers are on the way. has a lot more to offer.
Your vision for the company?
We are a data and technology company which is creating a new asset class to deliver higher returns to lenders and greater and cheaper access to credit for the borrowers. With a focus on customer convenience. Whether it is the product, the technology, the customer-interface or the communities we have built, the aim is to deliver a world class experience to our borrowers and lenders.

Where do you see yourself five years down the road?
According to data released by P2PFA, the cumulative lending through P2P platforms globally has grown dramatically from 2.2 million GBP in 2012 to 4.4 billion GBP in 2015. As per a Transparency Market Research, the P2P lending space is growing at a CAGR of 48% and is expected to reach $800+ billion in 2024.
Similar potential lies within the Indian market which can attain a size of USD 4-5 billion in the next 5-6 years. The potential is immense; there are plenty of unutilized funds, and several individuals and businesses in need of such funds. With the help of technology, P2P lending can bridge this gap.

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