Fair forays into secured loans


Faircent, the country’s largest peer-to-peer (P2P) lending company, has now started to focus on secured lending, a segment in which these players have so far not been present. Now, with corporate ties, the company has made a foray into auto lending and is considering distributing loans for other asset-backed products.

These companies allow a person to lend money to other unrelated people without the help of a financial intermediary. And, these are mainly accessible by consumers who have difficulty obtaining a loan from a bank or other non-bank financial corporation (NBFC).

Vinay Mathews, Co-Founder and COO of Faircent, explained that outside of personal loans, even for secured products, some consumers may have difficulty taking out a loan due to their income or risk profile. . “Other than that, there are some areas that bank loans don’t extend to, such as education loans for coaching courses which can cost hundreds of thousands of dollars. So we also plan to explore these areas and plan to partner with relevant companies, ”he said.

Apart from this, Faircent also plans to explore other products such as gold loans, property loans, etc. Over the past two years, the P2P lending space has gained ground, and apart from consumers, even small and micro businesses (SMEs) have also connected with these players online to access credit. This is due to the slowdown in economic activity; even bank loans to the SME area have been reduced.

In order to stem the risk of default, Mathews said they will partner with companies whose employees can take advantage of the offer to ensure better background checks. Unlike personal loans on these P2P lending sites, these asset backed loans will have a fixed interest rate.

For example, at present, the company has partnered with Baxi, an on-demand motorcycle taxi company operating in Gurgaon and Faridabad.

According to a Reserve Bank of India (RBI) report in April, there are around 30 P2P lending companies starting up in India. Globally, cumulative loans through P2P platforms at the end of the fourth quarter of 2015 reached £ 4.4bn, up from just £ 2.2m in 2012. And in most of the countries where these companies are allowed to exist, they are treated as banking intermediaries. Now even the RBI is considering regulating this industry and is supposed to issue guidelines about it.

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