P2P(Peer-to-Peer) 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.

When compared to other traditional debt products such as fixed deposits, debt mutual funds, and so on, P2P Lending allows investors to beat inflation and earn higher interest on their money.

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.

Lenders can expect a net pre-tax return up to 12 % XIRR Max. on the net invested amount. There are so many different rates of returns available in P2P space, largely depending on the time horizon, the amount you invest, asset type, and service provider. P2P investments, however, do NOT guarantee any returns.

Any Individual, a body of individuals, a HUF, a firm, a society, or any artificial body, with a valid Indian Bank Account and PAN Card, can lend on P2P lending platforms. RBI listed finance companies or Companies formed under the Indian Companies Act are also eligible to apply as Lenders.

We at Swaraj FinPro help investors to diversify their investments among different P2P service providers along with sufficient know-how. Our online P2P lending platform works as an aggregator for P2P lending products.

Peer to Peer lending, like other asset classes, works best with portfolio diversification. With an initial investment of INR. 1 lakh, you can build a lending portfolio across 100+ loans which ensures investment risks a minimized - enabling you to enjoy high yields consistently. Smaller investments, result in the concentration of portfolio across fewer loans and hence do not provide for sufficient levels of diversification. Hence, initial investments of less than INR. 1 lakh are NOT recommended.

Yes, Peer to Peer lending in India is backed by the RBI’s robust regulatory guidelines from October 2017. These guidelines recognize P2P lending platforms as a new class of NBFCs (“NBFC – P2P”) and define the scope of permitted activities, minimum capital requirements, and other key operational parameters.

As per RBI regulations, the P2P platform is managed by a trustee who always operates the escrow account. The trustee has access to the original borrower’s agreement and NACH mandates that allow them to take necessary steps to recover the funds on behalf of Lenders.

Not at all – you can continue to access the full-featured P2P experience at their website regardless of whether you use Swaraj FinPro or not.

Transfer of money takes place through an online automated process. The loan amount is transferred from the Lenders Escrow Account to the borrower’s bank account. All repayments– EMI and pre-closure –happen online via Electronic Money Transfer from the borrower’s account to the lender’s Escrow account, from where it gets reflected in the respective lender’s virtual account.