Remember the greedy man who brought Sukhilala from Nargis-Sunil Dutt and Mother India? Well, commercial lending has changed since the days when lenders like Sukhilala were everywhere. It’s not just commercial banks or RBI-regulated NBFCs, a new class of statisticians helps millennials become new lenders and get good returns on their investments.
New debt is smart. They are millennials, not banks. They’re not armed with hard-to-find legal books, but homeowners — smartphones or computers — love to play with the rules, thanks to online credit scores for teens and loan marketing tools like LenDenClub, SaveIN, etc.
LenDenClub has a registered base of around 6.5 lakh customers. Although SaveIn’s new app has seen around 50,000 subscribers, 70 percent of users who are members of the Generation Y population feel more relaxed when shopping online and have more numeric values for these transactions.
Bhavin Patel, co-founder, and CEO of LenDenClub said the Covid-19 pandemic has accelerated digital penetration across all industries, and the credit industry has also seen a transformation beyond imagination. During the global health crisis, millennials actively participated, as investors benefiting from P2P loans as an aspiring asset class offering lucrative profits.
Jitin Bhasin, founder, and CEO of SaveIN told FE Online that millennials are the most active digital smartphone audience and the biggest contributors to the working class in India, whether they are employed or self-employed. Being extremely active in social circles, millennials mainly trade with each other for short-term loans, and the value of the tickets is around Rs.7000.
But is it safe to borrow online? What about the return?
As regulated by the RBI, peer lending platforms cannot guarantee profitability. It presents an investment risk similar to other investment instruments such as the Mutual Fund, FD, and Debentures. However, the risk is diversified over very small amounts. borrowed (up to 500 investors for each borrower), does not affect the profitability of the portfolio, “said LenDenClub to FE Online.
According to Bhasin, the Covid 19 pandemic ushered in a new era of digital transactions because people were afraid to trade in cash. During the pandemic, people depended on each other for emergency and unplanned spending and then digital transactions at SaveIN increased.
However, it varies from investor to investor. The key to investing in a peer-to-peer lending platform is diversification – borrowing small loans. Given the pervasive risk, higher lending rates average 12-15% per annum, said LenDenClub in response to a question from FE Online.