Here are a few things you will need to get started:
- Your phone for the OTP
- PAN Card
- Recent passport sized photograph
- Aadhaar card or any proof of permanent address
Here is a new innovative Alternate Asset class for you to invest your money…….
P2P lending is an alternate asset class that gives you easy access to creditworthy borrowers where one can invest in retail loans for risk-optimized higher returns.
This is the only asset class that provides investors access to retail loans.
What is P2P Lending?
Peer to Peer Lending, also referred to as P2P Lending is an alternate asset class where an individual can borrow funds from multiple individuals through a digital platform. In effect, P2P platforms offer a digital marketplace to connect borrowers and lenders for unsecured personal loans and thereafter manage the entire life cycle of a loan to offer monthly returns to lenders.
Who all can Invest?
Any individual (18 years and above) or nonindividual entity with valid identity proof and address proof can Invest. NRIs cannot invest in their name.
Advantages and Value Proposition of P2P
Peer to peer Lending offers stable and risk-adjusted returns with no exposure to market volatility. It allows you to invest in new asset classes with benefits of better diversification and allows one to earn a monthly income as well as benefits of compounding through reinvestments of EMIs.
- FINZY is India’s leading P2P Lending Platform which provides access to hand-picked creditworthy borrowers and Investors. FINZY is a brand owned by Bridge Fintech Solutions Pvt. Ltd. Which is a registered NBFC P2P with RBI. It’s been 4 years of delivering returns for our investors through a solid tech platform with digital processes. FINZY Head office is in Bangalore and Registered Office is in Mumbai.
FINZY is a large team with rich experience to help, support and manage the entire life cycle of the A loan from sourcing, verification, analysis, documentation, EMI collection, and recovery.
Average returns in IRR terms for the last 4 years post-write-offs (if any) and FINZY fees have been approximately 12%- 14%.
- Minimum Investment Rs. 50,000, Maximum Rs. 50 Lacs per PAN. All entities can invest except NRI’s.
- Preference to reinvest EMIs – Only Principal portion, Only Interest portion, EMI, pre- payment.
- SIP – with minimum Rs. 1000 (after an initial investment of Rs. 50k)
- Option to withdraw EMIs/ Re-invest EMIs lies with Investor
- As of now, all investment happens for 36 months with a monthly return of EMI
- Liquidity – in the form of EMIs only
- FINZY allows you to invest granularly in pre-verified creditworthy borrowers. We believe that a
- A portion of portfolio allocations to this new asset class will bring:-
- Lower portfolio volatility with an Additional alpha
- Cash flow option without compromising on returns Investment in an uncorrelated Asset.
- Opportunity to invest in an asset class that was primarily owned by Institutions i.e, Retail Loans.
- Returns potential is as high as 2.5 times of fixed deposits
Category of Borrowers
FINZY follows the RBI mandated KYC verification process for all its users and assesses the creditworthiness of a borrower across 130 different parameters. This risk assessment results in FINZY Score which in turn categories the sanctioned borrowers across 15 rating grades (A+1 to B6) and 5 broad rating categories A+, A𝞪, A𝞫, B𝞪 and B𝞫.
The interest rate on a loan is linked to the FINZY Rating. Interest rate ranges from 7.99% to 21.99% as per the table below:
FINZY has been focusing on salaried borrowers with currently more than 90% of borrowers being salaried. Most of our borrowers are from Tier 1 cities and would have CIBIL history. We offer loans to borrowers with a minimum of Rs. 35000 take-home salary and for self-employed with minimum income of Rs. 5,00,000 as per the last filed income tax return. 90% of our borrowers are at the peak of their earning careers between the age of 25 years to 45 years. FINZY passes on all the interest payments by borrowers to the lenders, we do not keep any interest differential on loans. FINZY charges 2% FINZY fees and 18% GST on the EMI amount paid back to the lenders. Thus, FINZY earns only when we return money to lenders and not on the investment amounts. FINZY has offered an average of 12.5% post FINZY fees return to its lenders in FY 20 21.
Borrowers Due Diligence
FINZY uses a scientific approach to analyze the repayment capacity of every Borrower. We study multiple factors of each borrower across income details, several existing commitments and leverage, past loan repayment track record, employment details, and several other related parameters. Based on these inputs, we arrive at FINZY Rating using our proprietary credit algorithm.
- The information used spans across the income documents taken from borrowers viz. salary slips, ITR, Form 16, CIBIL information, EPFO data, bank statement, social media imprints, third-party databases, etc.
- Apart from this Borrowers digitally provide the following documents before disbursement of
- Loan Agreement
- Demand Promissory Note
- National Automated Clearing House (NACH) registration mandate
The main risk in P2P Investment is the default Risk of the Borrower. FINZY makes all efforts to mitigate the default risk by:
- High credit risk assessment standards. Almost 86 loan applications at FINZY get rejected out of every 100.
- End of the 14 loans that get disbursed, we further try to mitigate risk by allowing only granular investment from each lender. This diversification at the outset and with each reinvestment cycle is of paramount importance from a risk management perspective.
However, the business of credit has risks involved. In the event of a borrower delaying, there is a rigorous process for collection and recovery that involves follow-up emails and text messages, phone calls, field visits, the appointment of third-party collection agencies, and legal recourse. From a settlement risk perspective, RBI has mandated all P2P platforms to maintain escrow accounts for funds received from Borrowers and Lenders. These escrow accounts are operated by a SEBI registered trustee.
From a business continuity risk perspective, please note that the loans are directly between lenders and borrowers and these do not flow through the books and bank accounts of FINZY. This makes the investment bankruptcy remote and further, there is a provision in regulations that would allow a third party to step in and run the processes till the maturity of loans.
INZY offers a very detailed and transparent dashboard where an investor can log in and access his portfolio performance and track their investments. Details of delayed loans, restructured loans, written-off loans, and settled loans are provided.
Despite the covid situation, in the last 1 year from April 2020 till September 30, 2021, our NPA is limited to 1.50% only.
We have a strong in-house collection and recovery team and have tie-ups with bank-recognized collection agencies across the country. A well-documented process is followed for communication and action for each of the delayed cases which involves follow-up emails and text messages, phone calls, field visits, the appointment of third-party collection agencies, and legal recourse.
In addition, FINZY is also a member of CIBIL and all other credit bureaus and reports the borrower’s loan behaviour to these bureaus every month. This acts as a big deterrent for borrowers to repay on time else their CIBIL scores would be impacted.
The interest income is considered as income from other sources and taxation is as per the tax bracket of the individual investors. TDS is not applicable as of now.
FINZY provides a very simple interest certificate for every financial year mentioning the interest income, FINZY fees, and GST on the fees and write-off and write back if any.