Peer-to-peer lending (P2P) platforms have seen a rise in traffic as well as investor interest after registering themselves with the RBI. But they argue the Rs 1-million limit placed on lenders across all platforms is restrictive.
“With time, these limits are going to be relaxed by the RBI. These have been imposed in order to avoid rapid growth that could lead to systemic risk,” said Ekmeet Singh, CEO, Lendbox.
Industry players want the RBI to raise the limit for individual borrowers and remove the limit for institutional lenders.
OMLP2P has witnessed a rise in its costs and turnaround time after the new rules were brought into effect. “We are absorbing most of the costs, this will not be the case for long,” said Surendra Kumar Jalan, founder and CEO, OMLP2P.
“The benefit of the platform is its low cost of operations. With the restrictions, the cost of acquisition of a lender will increase multifold. That will increase the cost of borrowing,” said Pramod Kumar Akhramka, founder and joint managing director, OMLP2P.
Access to funds would be the biggest challenge, said Senthil Natarajan co-founder and CEO, OpenTap. He added P2P firms were now being forced to find more lenders.
LenDenClub chief executive Bhavin Patel said only 4-5 per cent of its lenders were above the Rs 1-million bracket but platforms would find it difficult to raise money from existing lenders.
Lendbox has seen a dip in interest from high net worth investors, family offices and investment houses. However, the regulations have lead to a surge in users, including first-time investors. “The RBI recognition is the biggest positive impact. Data gathering and reporting requirements also positively impact the industry,” said Natarajan.
i2ifunding saw its monthly traffic rise by 20 per cent after the guidelines were imposed and a significant jump in lender registration. However, the platform saw no change in traction from borrowers. LenDenClub reported a 25-30 per cent rise in user registration and an improvement of the completion ratio.
“After demonetisation, there has been a surge in demand. It is, however, too soon to gauge how much of this is due to the RBI guidelines,” said Natarajan.
“We have received multiple queries from venture capital firms and angel funds that are now considering this sector as a prospective investment option. We are expecting a bigger round of investment from institutional investors,” said Raghavendra Pratap Singh, co-founder, i2ifunding.
The industry’s opinion remains divided on capital requirements. While some executives deem them necessary to ensure only serious players enter the market, others question their necessity.