The outstanding personal loans aggregated to Rs. 2, 95,800 Cr in March 2016 in India. These are the official numbers. One can guess the amount of unofficial transactions (in terms of borrowing and lending) that happen between friends, families and relatives every day. According to a report by International philanthropic investment firm Omidyar Network, Big Data, Small Credit – The Digital Revolution and its Impact on Emerging Market Consumers, in India, more than 400 million people borrowed money in 2014, but only one in seven were approved as a formal loan. The potential for P2P lending is colossal in years to come especially for middle class salaried society. P2P lending is like a matchmaking where the investor (the lender) meets the borrower and the P2P platform that initiates the actual transaction i.e. finds a borrower a lender or vice versa, is the matchmaker. So now for the salaried single individuals it is not only the online match making web sites they need to visit. They can visit the financial credit match makers through their laptops sitting at their homes and make a deal at some really healthy interest rates.
Considering the demands, the spending’s, the needs that have been growing for people here India, the P2P market can be expected to grow by leaps and bounds for salaried class. There are differences within the salaried class as well. People have different social capital, education, incomes or cultures which can moot behaviors regarding the financial needs within these sub classes.
According to the findings released from a pan India survey conducted by a Bangalore based P2P matchmaker, Loanmeet, 90% of the salaried people looked for faster transactions in terms of loan approval, minus the hassle, less documentation and lower interest rates and transaction fees. There were around 124 responses from the survey of which 65% of the population was salaried class i.e. working in a Private or a Government organization. Majority of the women felt that the value of money and the experience of their first transaction as a borrower in P2P would be the major reason why they would want to come back as a customer as to lend or borrow. 95% of the survey takers felt that once their loans were approved, they in future would want to lend when they have enough capital as they would be in a better position to judge the other person then at that point in time. It is a chain reaction one said. “If I borrow today I am bound to come back. Not only as a borrower but as lender too. It is a feel factor that, the empathy that comes from within that I can help someone as someone helped me some time back plus ofcourse I can earn some really good returns”. Two wheeler vehicle loans and buying basic amenities such as TV, Fridge, Sofa Set were the most common answers that were heard for a reason to borrow from Loanmeet as majority in sample were youngsters who had just started their professional careers in new cities and had long term plans to settle down.
Middle class or rather the salaried class can be considered the safest bet to lend according to us here at Loanmeet. The concept of fixed income comes into picture. Salaried class are the ones who have a fixed source of income (monthly salaries + perks). It would be the easiest for them to pay back loans through their salaries with no threat to the lender for a wilful default. There are situations in life were salaried class might be short of funds in a particular situation ( e.g. a medical emergency or maybe relocating to a new city- hence buying all the basic amenities to settle in a new house) . The urgent need of funds can derive them to personal loans or credit cards. Credit card payments could be scary and these are for a very short duration. Personal loans on the other hand have a colossal interest rates. This is where we the borrower-lender match makers come into picture. How easy it would be for a middle class family to borrow through a P2P platform and keep paying monthly EMI’s at a small interest rates. Life would be sorted for these people and even the lender can sleep peacefully with a surety of good monthly returns. It, on the other hand would be a fixed source of income for the lender as well as he would be receiving the regular monthly payments. For someone who dreams to have a buy to let home some day and rent it to someone ahead, receiving monthly EMI’s could be dreamt of as receiving monthly rent instalments for the time being. It is a good initiative, lend if you have money rather than spend it and receive it back with phenomenal returns. This goes for the salaried class even. People who work and have money, can lend and earn. Someday, somewhere you might also require funds. Who knows?
P2P can be considered a very aggressive concept to bridge the gap of getting a formal loan for the service class which they are denied some or the other way. Forget everything! Why approach a bank when you have a better supply chain. No bottlenecks. Less documentation. Faster loans. Lesser interest rates. No running around. P2P according to Loanmeet is an evolution. We believe we are here to change the market and fulfill all the needs a normal middle class person working in a big city might aspire to have. As will smith quotes in a popular movie Concussions “Need is not weak. Need is need.”