Page 47 - Banking Finance January 2024

ARTICLE

PEER TO PEER

LENDING -

OPPORTUNITY

OR LOOMING

RISK

Abstract of Article anks are the primary lenders when it comes to
Peer to peer lending refers to the loans extended by B satisfying individual and small business finance
needs. Banks have expanded their network of
individuals and small businesses to another individual branches, ATMs, BCs and alternate delivery
or small business without any intermediation from
channels under outreach programmes. As the economy
banks.
grows more and more individuals and business entities are
P2P lending is a form of financial technology which availing banking facilities. Government has also promoted
helps the people to come to the P2P portal which is it through various programmes and drives. However, there
a marketplace of investors and borrowers. are sections of society which are un-served or underserved
Entire process is digital and tech driven, cutting the by banking system in the country especially for their funding
processing time and allows the portals fast disbursals needs.
P2P lending sites offer better rate of returns than
Banks, being the custodians of public money, have developed
bank deposits to its investors.
robust risk management frameworks to secure the interests
It also offers availability of credit to those borrowers of all the stakeholders. Resultantly many customers do not
which do not have access to bank finance. satisfy the criteria set by the banks for granting loans.

Similarly MSME units who operate with thin margins and
About the author do not have sufficient collaterals to secure their loans find
it difficult to obtain unsecured loans at the lower interest
Pankaj Dadhich rate. Such customers usually opt for alternate sources of
Manager (Research) finance.
State Bank of India
State Bank Academy, Gurugram
Further banks run with brick and mortar branches leading

BANKING FINANCE | JANUARY | 2024 | 41