Page 51 - Banking Finance January 2024

ARTICLE

P2Ps, is capped at Rs.10,00,000. Maturity of the loans not
to exceed 36 months. Fund transfer between the
participants on the Peer to Peer Lending Platform shall be
through escrow account mechanisms which will be operated
by a bank promoted trustee. NBFC-P2P has to become
member of all CICs and submit data to them.

Road Ahead
Despite these challenges, peer to peer lending remains a
viable option for those looking for alternative investment
opportunities with potentially higher returns than traditional
bank deposits. After the legal recognition by RBI
transparency has increased which will improve the sense of
confidence in the minds of investors. Government's
selecting service provider. Gone are those days when
promotion to digital economy through Public Digital
customers used to visit bank branches frequently for trivial
Infrastructure, India Stack and Aadhar enabled services have
tasks. In fact fierce competition and expectations have rose
also helped to a great extent in rise of digital lending.
to the next level that banks are investing heavily in latest
Technological advancements such as Block Chain and
technology to analyse the trends, understanding the
Machine Learning has changed the lending landscape as the
customer behaviour, pattern and their needs so that
process of frictionless lending and rendering customized
innovative solutions may be provided which paves the way
financial services has significantly improved. Further
for sustainable growth.
historical data relating to the returns provided by existing
P2P players is also attracting new pool of investors.
Recent digital transformation and technological disruption
to provide frictionless credit has changed the lending
Market size of global P2P lending was approximately at USD
landscape in India. Be it emergence of Fin-techs and Lend-
153 billion in 2022. Large players such as Amazon, Google
tech or digital payments through UPI or digital lending
and Face book have entered into the market of digital
through pre approved loans entire industry is undergoing
lending which may prove to be threat for smaller firms yet transformation which not only provides business opportunity
with the expected standardization in the industry, demand
for the banks in form of new avenues of generating revenue
from SMEs, Real Estate and consumer credits the industry
and enhancing customer base but also throws challenges in
is bound to grow in coming years. Indian market is likely to regard to stiff competition from new age banks and fin-techs
grow at a CAGR of 21.6% between 2021 and 2026 and same
who offer faster delivery of services with customized
is likely to reach at USD 10.5 billion by 2026 as per a report
solutions. Banks usually follow the traditional methods of
of IndustryARC.
lending involving paperwork and formalities which are time
consuming and cumbersome while P2P platforms lending
Banker's Perspective depend on data-driven AI and ML technologies.
Commercial banks have evolved their process of service
delivery through adopting latest technologies such analytics/ As far as the P2P lending is concerned it cannot be
machine learning. Traditional banks as well as new age banks considered as a significant threat to the banks as long as it
are trying their level best to keep up the pace with ever caters to the underserved segments. Owing to the huge
changing needs and expectations of Gen Z customers who difference in brand image, skills and resources, currently
want innovative solutions at lightning speed. banks do not see them as competitors. However as it gains
momentum with the standardization in the industry,
Availability of easier solutions on finger tips with utmost increased awareness among borrowers and more capital
convenience and least time has become the key criteria for providers adopting the digital mode leading to the softening

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