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Indian companies have got the P2P lending space wrong. India is a P2P2P market where the middle ‘P’ is the person who has a hold over the lendee.
(1/n)
(1/n)
My house-help provides loan for commercial activity (vegetable sellers) and personal purposes (residents in her community to build houses in their villages) and has ‘zero’ NPA
.
I found this stat super interesting and got her talking (2/n)
.I found this stat super interesting and got her talking (2/n)
The commercial lending (vegetable sellers) -
The vegetable seller takes groceries on loan every morning and pays back at the end of the day with a ROI of >25%. The lendee pays back even at a loss to maintain reputation. (3/n)
The vegetable seller takes groceries on loan every morning and pays back at the end of the day with a ROI of >25%. The lendee pays back even at a loss to maintain reputation. (3/n)
Same is the case if the lendee takes for personal purposes like marriage etc. For these people image > financial loss.
And if the person doesn’t pay back they have the whole information about the person and don’t hesitate to use muscle power. Ensuring low or no NPAs (4/n)
And if the person doesn’t pay back they have the whole information about the person and don’t hesitate to use muscle power. Ensuring low or no NPAs (4/n)
Now, if lenders who want to participate in the P2P space should actually lend to these people who own informal micro loan market. This will enable a win for the whole eco system. Assuming the influx will drive interest rates down (5/n)
The only issue is tracking & transacting as the whole market works on cash. Would be super interesting to solve for this.
This also explains why the old chit fund system still works in India (and now start-ups in USA are copying this). (6/6)
This also explains why the old chit fund system still works in India (and now start-ups in USA are copying this). (6/6)
