Page 46 - Banking Finance JANUARY 2017

ARTICLE

Although the P2P lending industry is flourishing by leaps and Their approach is to make virtual platform accessible for
bounds, if market analysts are believed, there are serious borrower's who need fast credit within short span of time
risks also that could derail it. Major risks are Interest rate at very reasonable cost so are trying to lure borrowers, who
hikes, new regulations, frayed bank relationships, and other have pathetic banking experience or fed up dealing with
factors could put a stop to the industry's current surge. banks for financial service.
Credit consumers and investors interest are basic challenges
that need to be considered proactively. Since regulatory guidelines in India for P2P lending is still
underway so major issues before the regulator comes per-
Alternative Finance Model: taining to KYC & AML (Anti Money Laundering) compliance,
protection of investor interest, Risk management policies
Across the globe various Finance Model is available along and procedure followed by them. Recovery procedure
with P2P lending in the financial market where consumers
adopted by the P2P platform operators is still a moot mat-
deal as per their requirement considering the risk factor and
ter because financial records is live indicator how various
liquidity. Other important factors are yield on investment
NBFCs and other financial units have minted money by lur-
and hassle-free access of credit that score above all in cre- ing public for higher returns and tarnished the image of
ating the market share. Among the various alternative fi-
regulator usually strive for better governance.
nance model available, different platforms of P2P lending
and Crowd funding are highly demanded which is well de- Whether Indian economy needs P2P lending platforms when
picted below. By the end of year 2015 only P2P consumer banking industry is catering the various needs of financial
lending has achieved the market share of GBP 909 Million. market and when government is leaving no stone unturned
for Covering the
unbanked population
under financial inclusion
by launching PMJDY
(Prandhan Mantri Jan
Dhan Yojna) and several
other schemes mainly
to assist and uplift the
bottom layer of the so-
ciety and when RBI is
playing proactive role in
regulating the NBFCs
and banking industry
where global norms like
Basel III, FATCA (Foreign
P2P Lending in India: Whether we need

it
In current banking scenario when NPA's (Non Performing
Assets) have been making headlines as Bank after Bank reel-
ing under burden of Bad Debts, P2P lending Platforms have
started developing in India but still at a very nascent stage.
Various firms have created P2P virtual platforms and mainly
focusing on micro credit by targeting unbanked customers,
start-ups and consumers financed by unorganized financial
sector.

46 | 2017 | JANUARY | BANKING FINANCE

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