11/17/2017 NBFC P2P lending needs to demonstrate viability to sustain business model | Zee Business

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NBFC P2P lending needs to demonstrate viability to sustain business model

The Peer to Peer lending lending involves matching of borrowers and investors via an online platform managed by P2Poperator 

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Symbolic image for online lending: Image source: IANS

Updated: Thu, Nov 16, 2017 07:21 pm

ZeeBiz WebDesk

Non-banking nance companies, which has grown signi cantly during the last few years, have contributed to almost 10 per cent of

the total assets of the nancial sector, said a CARE Ratings report. 

According to the report, with P2P lenders coming under RBI purview, the system has been able to create con dence amongst

participating lenders and borrowers. The P2P lending involves matching of borrowers and investors via an online platform managed

by P2P operator. 

The RBI has recently introduced guidelines for NBFC P2P, which de ned the scope of activities of a P2P platform and prudential

norms with respect to maximum leverage ratio, aggregate and individual borrowing and lending limits of a participant and maximum

loan tenure. 

The guidelines also talk about other aspects like fund transfer mechanism, participant grievance redressal mechanism and various

transparency and disclosure requirements to be undertaken by a P2P platform. Apart from this, sharing of data to the credit

information companies is also an important norm prescribed by RBI as it will help the P2P model to maintain asset quality. 

Citing the global growth of P2P lending in terms of both volume and number of players, the report said that the industry in India is at

very nascent stage and has limited operating history. The ability of the P2P operator to assess borrowers based on their credit

models in terms of accuracy and consistency on a large scale is yet to be demonstrated. 

  

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P2P operators have to demonstrate their viability in terms of their ability to bring in volumes and sustain their business model on a

continuous basis, said the CARE Ratings report, while adding that despite the global existence of P2P lending for more than ten years

it has been struggling with issues such as frauds, higher delinquencies and nancial sustainability.

The Ratings expects that P2P lending will continue to grow despite facing challenges of scaling up substantially. It also cites a

cautious approach for the various market participants including NBFC P2P, investors and borrowers to create a sustainable model in

the long term.

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Paytm ties up with ICICI Bank to o er short-term digital loans

The new service will o er an interest-free short-term digital loans up to Rs 20,000 for a maximum of 45 days

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A policewoman in Ranchi shows Paytm app on her smartphone. Image source: IANS

Updated: Thu, Nov 16, 2017 03:59 pm

ZeeBiz WebDesk

Paytm customers will now have access to instant credit as the digital payment player has partnered with the country’s largest private

sector bank, ICICI Bank, to jointly launch a new service called ‘Paytm-ICICI Bank Postpaid’. 

The new service facilty will now o er an interest-free short-term digital loans up to Rs 20,000 for a maximum of 45 days, said a report

on Moneycontrol.com.

 

“This new o ering will enable millions of Paytm customers to get access to instant credit for the rst time for everyday use-cases

ranging from movies to bill payments to ights to physical goods,” said a statement issued by the ICICI Bank.

The statement further stated that Paytm-ICICI Bank Postpaid is a digital credit account with instant activation: with no hassles of

documentation or branch visit, while activation is fully online. There is no transaction, joining or hidden administration fees either, it

added.

The new facility will be available on all days at any time. It will reportedly use the Big Data-based algorithm by ICICI Bank for real-

time credit assessment of customers.

It said: “The algorithm uses an intelligent combination of nancial and digital behaviour of the customer including credit bureau

check, purchase patterns, frequency of purchase to ascertain the credit – worthiness of a customer within a few seconds. Based on

the credit-score of the customer, the bank o ers up to 45 days interest-free credit limit. It ranges from Rs 3,000 to Rs 10,000,

extendable up to Rs 20,000 based on the repayment history."

Paytm-ICICI Bank Postpaid will also o er a quick checkout to customers with the Paytm Passcode, the statement said.

The Paytm-ICICI Bank Postpaid will o er the credit limit to select customers of the bank using the Paytm app, and it will  also be

available to non-ICICI Bank customers using the Paytm app soon.

Anup Bagchi, Executive Director, ICICI Bank said, “We are now witnessing two distinct new trends: One, many customers—who are

new-to-credit and therefore, do not have a credit history-- are looking for short-term credit.  Two, millions of young Indians are now

buying products online. We have combined these two insights to bring out a novel proposition of giving short-term credit to people,

completely online and instantly."

 

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"We have leveraged upon Big Data to develop a new algorithm that instantly assesses the credit worthiness of customers using a

combination of nancial and digital parameters to sanction the credit line instantly,” Bagchi said. 

Meanwhile, Vijay Shekhar Sharma, Founder & CEO, Paytm said, “It’s common for us to ask a trusted friend for money for frequent

expenses and promise to pay later. These exchanges are based on trust that you will pay back as soon as you have access to money."

Elaborating further, he said: "We believe our customers are sincere with their payments and Paytm Postpaid will play a major role in

helping them pay for their daily expenses on time. This will democratize access to credit including those with less disposable

income. We are happy to launch credit in a digital way to the masses in the form of Paytm Postpaid with ICICI Bank as our rst

partner.”

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11/17/2017 NBFC P2P lending needs to demonstrate viability to sustain business model | Zee Business

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