P2P Lending - Emerging Trend In The Banking Domain - Niteen From IIM Calcutta
Peer-to-peer lending (P2P lending) is the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers. Since peer-to-peer lending companies operate online, they can run with lower costs and provide the service more cheaply than traditional financial institutions. As a result, lenders often earn higher returns compared to savings and investment products offered by banks, while borrowers can borrow money at lower interest rates. Currently, P2P online players are registered under the Companies Act and are largely unregulated. The people behind these fintech startups are either technocrats or young entrepreneurs. Unlike banks that have savings and credit history of borrowers P2P players largely depend on credit bureaus for assessing the credit worthiness of borrowers. But, not all borrowers are part of credit bureaus in India. Moreover, P2P lending runs the risk of fraud such as money laundering, cyber theft, data theft, ponzi schemes.
