P2P Lending invests in the new India

in 2020, as the World’s largest democracy went into one of the harshest lockdown to combat the Coronavirus pandemic, a new set of frontline fighters emerged. India is proud of its doctors, health care workers, administrators, police and emergency staff who battled COVID and worked diligently to fight this terrible enemy and protect the population.

While no praise is enough for the corona warriors, we must also give some thought to the unsung heroes, who in these tough times, are silently but diligently working to create an emerging India. The local kirana shop owner who even during complete lockdown went to the sabzi mandi to get essential supplies so that we could cook in our kitchens. The milk-booth owner who stepped out of his home, when no one dared, just to ensure that we had milk for our tea and bread for our breakfast. The gas agency that ensured that the kitchen stove kept burning and the Chemist who delivered essential medicines. We must acknowledge numerous such small but integral part of the supply chain that ensured that India’s economy kept chugging along even when everything else had stopped.

Even when Unlockdown 1.0 began, it was not the big chains and stores but the small shopkeepers – the local mithai shop, shoe store, phone repair shop – that were the first to open and kickstart the economy. But to keep moving they needed support. Short-term credit support – to pay bills, salaries to staff, purchase inventory to meet unexpected demand, ensure cash flow and arrange critical funding that would help them quickly scale up to meet surge in post-lockdown demand.  

But at a time when credit was needed, the most it was available the least. Most banks and traditional institutions had stopped lending - either their underwriting methodology was not equipped to evaluate constantly changing financial and credit status of borrowers or because their systems required physical contact with borrowers and could not adapt to the new normal. Over the last few years, with banks tightening their purse due to liquidity crunch and increased NPAs, COVID-19 crisis has further opened the already wide credit gap in the Indian economy. As per the Central Bank data published as part of its annual report showed that while credit to the MSME sector was at 14.08% a year ago, it had decelerated to 2.34% at the end of March.  

P2P lending has been working towards bridging this gap. Contactless online process, innovative products and offers and an alternative credit supply that understands the unique nature of demand created in these uncertain times and invest in it. We have always maintained that P2P lending has the power to unshackle individual funds trapped in low yield investments and create an alternative credit supply in the economy. The 2020-crisis has validated our belief.

Much to our delight, the individual lenders have shown a tremendous capacity and strength to understand and adapt to changing times. Our lenders have understood that their investments help power the real economy. Today, lakhs of Indians are using P2P lending to empower women entrepreneurs, fund small scale businesses and finance start-ups that will build tomorrow’s India.

We witnessed minimal withdrawal by lenders and continued daily disbursements throughout the last year. In fact, today new investments and average per day lender registration are back to pre-2020 levels. The confidence imposed by lenders in their fellow Indians to service these loans is a reflection of their faith in the Indian economy to bounce back. It is time to acknowledge and be proud of P2P lenders who have continued to invest in India for India.