When The Banks Refuse

Peer-to-peer lending provides opportunities to both borrowers and lenders, creating a new way to dip for money when needed, says Shipra Sharma.

- Shipra Sharma

What do you do when you need the money and don’t have it? You borrow. What if the bank refuses to lend you? You ask friends or relatives, which is the general trend. However, there are many people today who prefer to keep their borrowing spree away from the glare of family and friend circle scrutiny, thanks to the online peer-to-peer (P2P) lending platforms that exist these days. These platforms are manna for both borrowers and lenders; unlike conventional lending through banks and lending companies, P2P uses informal routes to make credit available to those who need it.

“I had a fabulous job offer from a leading online portal, but I needed money to shift to Bangalore. I decided to try out a P2P lending platform,” reminisces 26-year-old Pranav Saraf, who has managed to repay the loan and gloats over the experience to several of his peers. In the past two years P2P lending has become one of the most talked of Fintech innovations which is yet to fall under the RBI regulations. Fast to pick on the growing tribe of P2Ps, the RBI has put out a consulting paper, which implies that this form of lending will also come under the purview of the regulator soon.

For those who have the money to lend, here is a route to lend and earn on the loan extended. And, for those looking to borrow, because the conventional routes are no more existent for them, there is chance for them to realise their financial dreams. Simply put, P2P is a new method of debt financing that allows people to borrow and lend money without a financial institution. Harnessing technology and big data, P2P platforms connect borrowers to investors faster and cheaper than any bank. The popularity of these platforms is with youngsters, who are yet to find formal lenders opening up to them.