Informal lending forms a large part of the Indian financial system and this is mainly due to the fact that financial inclusion is limited to opening a bank account of individuals rather than giving them access to the plethora of financial products that are actually available in the market.
As per the World Bank, 40% of the Indian adult population borrows from informal sources of lending when it comes to meeting their financial requirements. While only 6% of the adult population borrows from formal sources of lending. This is majorly due to low penetration of Bureau, a parameter on which Bank’s lending decisions rest. Getting a loan becomes even more difficult in case of small business owners.
The three founders of India’s fastest growing online P2P Lending platform, Lendbox observed the exact same problem and pledged to solve it through technology, thereby creating a transparent, convenient and seamless system where creditworthy borrowers would be able to transact on short to medium term personal loans through individual or institutional investors. Lendbox’s credit analysis engine factors into account more than 120 data points such as the investments, utility and mobile bills, education, qualification, credit card bills, employment/ business history, online spending and social media behaviour that can provide a much deeper risk assessment of the borrower. Lendbox caters to a wide base of users simply because of the unconventional approach to assess risk of the borrowers as it calculates through the use to data engines the borrower’s intent to repay rather than just his/her historical credit history.
Peer to peer lending is quickly emerging as a popular alternate investment class in India. Investors lend through Lendbox as they get much higher returns on their investments (average 25%) compared to those from fixed deposits. Additionally, investing through a P2P platform is safer than the equity markets which are highly volatile and risky.
Lendbox started operations in the last week of November 2015 and has witnessed exponential growth since then with over 1,200 registered users on its platform and more than Rs 30 lacs of loans have been disbursed through its user-friendly and intuitive P2P Lending platform. More than 2.5 crores has been committed by lenders. Lenders can commit upto Rs. 10 lakhs which helps them invest in multiple borrowers across risk classes.
Lendbox aims to become a one-stop shop for all financial needs of its users. These loans can range from funds required for a wedding to finance a business’s working capital to setting up an office, refinancing an existing debt or renovating a house. Lendbox aims to make finance easily available to every corner of India. This is being bolstered by a high Internet penetration rate and also the current government’s drive to ensure that every citizen has a bank account and thus bringing the Indian populace within the organised financial sector that can help them in getting cheaper and more convenient financing options.
FinTech is currently at a very nascent stage in India and there is immense potential and market for it to pose a stiff competition to the traditional financial system, which is riddled with bureaucratic processes and restrictive assessment criteria that leads to the exclusion of a large part of the adult Indian population. Lendbox fills this gap by empowering people with surplus capital to invest in people who are in needs of funds and willing to repay.
Lendbox believes that this is the era to invest in a new asset class – “People”.