P2P lending is the oldest form of lending. People who knew each other lent money to each other. All of us have done this; we have borrowed from friends and family to meet that unexpected expense.
People lent to people they knew because they knew that the money would be repaid and borrowers borrowed because they did not have to pay higher interest rate to a money lender.
'When was the last time you went back to your native place and connected with your extended family? Our circle consists of various buckets - work, family, old college friends. Typically, one is not comfortable lending to (even offering) or borrowing from (even asking) from our circle', says Niti Gupta, Co-Founder, -i-lend.in
Enter the internet, i-lend.in brings together borrowers and lenders on one platform and facilitates the transaction. i-lend takes care of the paperwork and legal documentation.
Loans on i-lend.in are not automatic. i-lend has instituted strict mechanisms for credit verification of borrowers and lenders including all the standard ones that the big banks use - ID proof, Address Proof, Employment and Salary Proof.
Suresh Jayanthi, Head-Business Development of i-Lend says,'The borrower benefits because he gets lower interest rates and there are no hidden charges.' Banks charge a pre payment penalty if a borrowers forecloses a loan. 'That is unnatural; the bank is punishing good behavior.’ points out Suresh. On i-Lend, borrowers can repay as quickly as they can and avoid all pre payment charges.
Lenders get higher rates than a regular savings bank account or a fixed rate.
What about the risk of default for the lender?
One key aspect of i-Lend's model is that a lender can lend a part of a borrower's loan requirement. 'If a borrower wants Rs 50,000, he can get it from upto 10 different lenders.', says Niti. This way the lender can manage his risk by mixing credit worthy borrowers with low lending amounts to less credit worthy borrowers.
i-Lend (i-lend.in) has started operations in Hyderabad and is accepting borrower and lender listings.