Context :
P2P
lending machine firing on all cylinders amid slackened bank loan
disbursals / 24
Oct 2021
Extract :
It
has never been better for peer-to-peer (P2P)
lending platforms, which are seeing a considerable increase in the number of
people wanting to lend or borrow money. While slackened loan disbursals by
banks and other institutional lenders have driven borrowers to peer-to-peer
lenders, low fixed-income returns are prompting rich
investors to lend money on these platforms
at rates ranging from 10% to 18% per annum.
P2P
lending is the practice of lending money to individuals via an online platform
that connects lenders with borrowers.
This
mode is useful for both lenders and borrowers because the former can earn a higher interest rate (than
bank savings account or many other debt instruments) and the latter can obtain
funds (unsecured loans) at lower rates than what banks or nonbanking financial companies
(NBFCs) offer.
India
has nearly 20 P2P lenders, with a combined outstanding loan book of around Rs 5,000 crore. These entities are regulated by the RBI.
We
do nearly 130 crore worth of loan disbursals every month. Over the past one
year, we have grown over 30 times, said Rajat Gandhi, founder and CEO of Faircent, which claims to have
a loan book worth 2,000 crore.
Our
volumes shot up after we rolled out a string of new products for both lenders
and borrowers. At a portfolio level, we are able to deliver 12-15% returns, after adjusting for expenses and defaults,
he adds.
The bulk of the lenders filling up the rosters of
prominent P2P platforms are return-hungry retail
investors and traders with surplus cash flows.
Several high net worth individuals and
family offices are writing large cheques favouring borrowers on these
platforms.
They are prompted to lend on platforms because their
traditional fixed-income investments - such as bank fixed deposits,
savings accounts, debt MFs, debentures and corporate FDs -
are yielding 3-7% on an annual basis.
My Take :
Ø P2P
Lending Regulations ……………………….[ 29 April
2016 ]
Extract :
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
Once again, I am afraid, RBI will say, " Sorry , No ! "
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 !
QUESTIONS :
Ø Can our P2P lending system, overtake
the Chinese system ? If so, when ?
To be able to overtake the
Chinese, we need following :
# All payments above ( say for example ) Rs 500 / , must be made
DIGITALLY – and based on UPI.
Hopefully, in such a situation, 95 % of sale / purchase transactions will
become DIGITAL . This will
LONG PURCHASE HISTORY ( goods or services )
# Based on that, UPI to develop each person’s CREDIT RATING / CREDIT
SCORE
# When any person “ applies “ for a loan on any P2P lending platform, UPI
will make available ( to
concerned applicant’s CREDIT SCORE at that moment )
# This data will enable that P2P platform to approve or disapprove that
loan application
# In case of “ approval “, this CREDIT SCORE data will enable the P2P
platform to specify ( automatically, through use of an algorithm ) :
= Loan amount being sanctioned
=
Interest
Rate applicable
= Moratorium
if any
= EMI / total period etc
Ø Is there any indication of emergence of
such a scenario ?
Yes . These are :
[ A ]
Birth
of a Black hole ? …………………………..[ 18 Jan 2021 ]
Extract :
What
data will not be able to escape this black hole ?
STAGE 1
To begin with, your entire PURCHASE HISTORY of a life-time,
comprising :
WHAT you purchased - WHEN – from WHOM – at WHAT PRICE – HOW
much qty., – how PAID for
STAGE 2
Next, it will compile data about each unique item that you ever purchased
– and some more :
Ø Frequency of Purchase
Ø Package Size
Ø Brands ordered
Ø Mode of Delivery
Ø Mobile Number ( and, may be all of your CONTACT DATA – to entice
your friends / family )
Ø Your MONTHLY CONSUMPTION RATE for each item ( and by using AI,
size of your family )
Ø Whether you are single or married ( does not require sophisticated
software ! )
Ø If married, number – and age – of your children
Ø Your bank ( - and your bank balance ? You bet ! )
[
B ]
Explaining
e-RUPI ? But end up Confusing ? [ 02 Aug 2021 ]
Extract :
In this entire process, is there ( even a remote )
possibility that either the Government or the Issuer’s Bank or the Service
Provider’s Bank or NPCI , would be able to continuously / dynamically compile
following Database ( without having to SNOOP or ask for anyone’s PERMISSION ) :
# WHO
purchased ( each beneficiary )
# WHAT
purchased ( goods or services )
# WHEN
purchased ( Date=Month-Year )
# WHAT price
purchased ( Rupees per Unit )
# WHERE
purchased ( details of each
Service Provider )
I urge Smt Sitharamanji / Shri Piyush Goyalji to :
# Prepare an OFICIAL / AUTHENTIC process of e-RUPI and publish on
several online / offline media
# Avoid any
possible allegations of snooping / surveillance / compilation of
LIFE-LONG BUYING HISTORY of millions of beneficiaries ,
by making clear statements in Lok Sabha
[ c ]
Crypto
: Corruption : Corona : China ………………..[ 17 June 2020 ]
Extract :
What will convince RBI / Government to issue OFFICIAL VIRTUAL
CURRENCY ?
Here is a brief ( non-comprehensive
) suggestion for
proposed Law :
Ø While banning Private Crypto,
introduce IndiaBit ( Govt Virtual
Currency )
Ø With
some effective date , withdraw all Paper Currency ( forget coins )
paper to digital )
Ø As of a date , bank balances in everyone’s bank account gets converted
to IndiaBits
Ø Set time limit within which people can deposit their paper currency into
banks for instant conversion
Ø After set date, paper currencies held by anyone ( individual or any legal
entity such as a Company ),
purchase transaction
Ø All future financial transactions ( sell / buy of any goods or services ) can
only be through mobile-app based DIGITAL transactions
Ø Since all transactions will become DIGITAL , Govt would have full / life-
time LOG of each citizen’s “ Sale or Purchase “,
[ Who bought What , When , from Whom , at What price , Where etc ] .
Ø Here is why automatic compilation of such CONSUMPTION DATA for the
entire economy, will be a GAME
Economic data will help policy ………………………………
16 June 2020
I have no clue as to what mechanism could be used ( Inter-Currency Exchange
Rate ) for payment for
we introduce IndiaBit
But if IndiaBit can ,
# To begin with bring out all BLACK MONEY ( stashed away as paper currency
notes ), and deploy the same
purposes , and
# Put a Full Stop to any future generation of Black Money ,
- then
my proposal deserves a debate
with regards,
hemen parekh / hcp@RecruitGuru.com / 25
Oct 2021
With regards,
Hemen Parekh
/ 25 Oct
2021 / hcp@RecruitGuru.com
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