P2P Lending allows everyday investors to earn returns from their own idle money while helping other Indians, SMEs and MSMEs, side-step the often inaccessible and expensive credit provided by traditional financial institutions. Peer-to-peer lenders are fast filling a funding void left by the banks. It is truly an industry by the people, for the people.

And it has tasted great success since inception in 2015 in India. By some estimates, the Peer-to-Peer Lending market in India is expected to touch 1,000 crores by 2020 – a spectacular growth rate by any standards. So, should the fence sitters join the bandwagon?

To look at risk mitigation tools enforced by Faircent.com, India’s largest P2P platform: most significant is that it limits an investor’s exposure to only 20% of any one loan and encourages them to spread their risk by investing small amounts across multiple borrowers. To this add banding borrowers in risk buckets, quality underwriting practices and proactive arrears management and collection. Thus, they are providing a fairly-controlled environment for a disruptive set-up. And this reflects in returns. Lenders are earning 18% to 24% p.a risk-adjusted returns on the platform.  

It’s important to remember that P2P lending is a market linked investment plan which doesn’t guarantee returns like bank deposits. But, an investor looking for higher returns and aware that with it comes higher risk, should plan P2P lending in its portfolio.

And the sooner the better. Any Personal Loan takes anything from 6 month to 36 months to mature. Hence, though both principal and interest starts hitting the bank accounts from the very next month, exact returns from the portfolio will take time to reflect. Plus, the investment is not a one-time affair. It takes time to build a portfolio. Planning the allocation of available funds is the key to make higher returns. A large selection of borrowers is available across risk buckets, educational profile, financial and professional background. Careful evaluation of borrower details provided before selecting them is a must. Tech-enabled tools like auto-invest has been made available to make this task faster and easier. But the key is to build a portfolio by selecting the right borrowers and investing small amounts across many. This takes time.

So take the plunge now! There is never a bad time to do a good thing! Click here to Sign Up!