2017 is being touted as the year of fintech startups in India. Although relatively young, the fintech market is undergoing a phase of rapid growth and is forecasted to cross $2.4 Bn by 2020, as per reports by KPMG India and NASSCOM. India is currently home to more than 500 fintech startups. Amidst the rising class of digital wallets, UPI, mPoS, one sector that is slowly and silently rearing its head is P2P lending (peer-to-peer lending).
Currently, at a nascent stage, the P2P lending landscape in India is also poised to grow into a $4 Bn-$5 Bn industry by 2023. The domain’s origin actually dates back to 2012, when the first peer-to-peer lending company i-Lend was launched. At present, the P2P lending space is populated by more than 30 players including Faircent, LendBox, LenDenClub, IndiaMoneyMart, Monexo, Rupaiya Exchange, LoanBaba, CapZest, i2iFunding and many more.
Alternative lending startups have already attracted $220.66 Mn in funding between 2015 and 2017, from industry stalwarts such as T.V. Mohandas Pai, Fusion Microfinance CEO Devesh Sachdev, Vikas Kapoor, Vikram Lakhotia, Tracxn Labs, VC firm M&S Capital Partners and more. Of this, nearly $50 Mn was secured in H1 2017 by i-Lend (undisclosed), LoanTap ($1.06 Mn), MoneyTap ($12.30 Mn), LoanMeet (undisclosed), ZipLoan ($0.65 Mn), EarlySalary ($4 Mn), Billionloans ($1 Mn) and others. This accounts for around 2.5% percentage of the overall fintech funding of $2 Bn during the said period, as per Inc42 Data Labs report.
To aid the domain’s growth in a structured and regulated fashion, the Reserve Bank of India (RBI) is finalising norms for peer-to-peer lending platforms, which will be made official this month. Based on a 17-page consultation paper that the nation’s central banking institution released back in April 2016, these guidelines will likely help steer the country’s social lending market forward in the years to come.
We at Inc42 thought to explore the journey of P2P lending in India, while also providing a glimpse of the fintech revolution. Before delving into its expansive scope, one needs to acquire a nuanced understanding of what P2P lending actually entails as well as the factors that have contributed to its impressive growth. It will also be helpful to learn about the various business models that currently exist in countries around the world. The current article will be part of a series dedicated to the analysis of the expansive P2P lending landscape in India.
The Fintech Revolution In India
Today, India stands on the cusp of the fourth technological revolution. Since early 2015, the fintech industry has undergone massive changes, chief among them being the move towards a cashless economy. The government’s enthusiastic promotion of cashless technologies – digital wallets, Internet banking, the mobile-driven point of sale (POS) and others – has also managed to restructure the financial sector, disrupting the long-held monopoly of traditional institutions like banks.