Reserve Bank Of India ( RBI ) just released a "
Consultation Paper " on P2P lending . Suggestions have to be submitted by
31 May
This paper suggests some guidelines for regulation of
this brand new industry , which boasts of some 30 online lending platforms , 20
of which , got launched in 2015
Total lending on these platform in last 2 years, approximates
Rs 27 Crores
I have no idea as to the number of lenders and number
of borrowers
As against this , the cumulative total loans taken by
some 630,000 borrowers from some 900,000 lenders in China , add up to Rs 11 Lakh*Crore from 2600 , P2P platforms !
I had only a cursory glance at the RBI guidelines but
could not find answers to following questions :
* Can "
Companies " register on P2P platforms as either Lenders or as Borrowers ?
I suppose , RBI's answer would be " NO " - even if it
is a Peer-to-Peer transaction between two entities ( bypassing the regular
middlemen ie: Banks )
Would that proscribe tiny " Start Up Companies
" to join P2P platforms ?
Somehow , that does not sound right !
* Can American /
European / Japanese citizens become lenders on Indian P2P platforms and lend
money to Indian borrowers ?
Once again , I am afraid , RBI will say , " Sorry
, No ! "
Of course , it is safe to say, " No " since
RBI does not want P2P phenomenon to " disrupt the existing banking
channels "
Reason ?
Countries of the world making up almost 56 % of World
GDP , have 0 % - 1 % interest rates ! That covers America / Europe / Japan
In some cases , there are NEGATIVE interest rates ,
meaning :
Instead of earning an interest when you put your money
in Fixed Deposit in those Foreign banks , in these countries , banks will
charge you a small fee to " safe-keep " your money !
And banks will pay YOU some small amount for taking out
loans !
Given this scenario , it is to be expected that rich citizens
of these foreign countries would just LOVE to become lenders ( to Indian
borrowers ) and earn , even as low as 5
% interest , on Indian P2P platforms !
And Indian borrowers would LOVE to take loans only from
such FOREIGN lenders who have very LOW expectations by way of interest !
Remember that today , an Indian borrower would pay around
15 % by way of interest to an Indian Bank for short term loans
As against this , the " Average interest rates
" on P2P platforms hover around 8.6 % globally
So allowing Foreign individual citizens to register as
lenders on Indian P2P platforms , would result in a win-win situation for both
!
Who knows , the amount of foreign funds arriving into
India through this route ( call it FDII - Foreign Direct Investments to
Individuals ) , could even exceed FDI !
Remember that , in the past 15 months , total loans
disbursed by Indian banks under MUDRA yojana , add up to mere Rs 1.5 lakh*crore to some
5.75 crore " Self Employed " who provide jobs to 12 cr persons !
FDII (through P2P platforms) can bring in 10 times that amount in 1 year !
And then , do our banks deserve any sympathy , with
their Rs 7 lakh*crore of NPA , which they want the tax-paying Indians to make
good through re-capitalization ?
Is it not about time when , if the Indian banks , could
not / would not make themselves obsolete , then someone else did ?
Hiding their heads in the sand is not going to save
them from the coming storm !
PS :
# Globally ,
loan default rate for P2P platforms is under 1 %
# My suggestion
( to enable FDII ) has the potential to bring back those
$ 501 billion
that Indians have secretly stashed abroad ! No rocket
science here
!
# FDII will
raise that number of Self Employed , enormously
# FDII will turn
India into a " Low Cost Economy " , thereby boosting
exports and
taking GDP beyond 10 %
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www.hemenparekh.in
/ blogs
30 April 2016
-----------------------------------------------------------------------------------------
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