Start-up sees peer-to-peer lending market growing big in India

India's peer-to-peer lending market can attain a size of $4-5 years billion in the next 5-6 years, according to start-up Faircent.Com.

There is no regulatory framework in place as yet for this business in India, although it is said to catching up fast in some western countries.

Faircent.Com claims to be India's only peer-to-peer (P2P) lending website, through which people having spare money can lend to potential borrowers for retail and business purposes.

Claiming that there was a demand-supply mismatch in the country, Faircent.Com Founder CEO Rajat Gandhi said he figured out this gap and he believes that "the industry would be doing around $4-5 billion of loans in the next 5-6 years."

Faircent itself has an average loan ticket size of just Rs 1.5 lakh. It allows lenders to give loans ranging from Rs 30,000 to Rs 5 lakh for personal needs and of up to Rs 15 lakh for business purposes.

The interest rate agreements are entirely between lenders and borrowers in which Faircent has no intervention, he said.

On the revenue share model, the company charges 1 per cent of the lending amount from the lenders.

The company started its operations in 2014 and claims to have over 5,000 registered lenders and 20,000 borrowers, while it has disbursed loans worth Rs 2.5 crore in 14 months so far.

At present, the P2P marketplace business model does not come under any regulatory framework in India, but Faircent said it abides by legal framework under Section 138 in The Negotiable Instruments Act.

"As a platform, we also come under the Information Technology Act. Over the past one and a half years, we are in active engagement with the RBI to bring P2P lending under its regulatory framework as we believe it will be beneficial for the industry as a whole in the long run and help it to prosper", Gandhi said.

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