Just a correction, the deck that you have shared is of Liquiloans who have an in-house collection team. So they have setup something to answer the problem
We have highlighted the fact that Liquiloans is doing quite good (as of now). So, YES, they must be doing few things right. However, going by the Global experience, we will still maintain that P2P can't grow. Like what has happened in the US or UK, the bigger P2P players will eventually turn into Banks.
So the credit risk is borne by the lender (the person planning to park the fund in BharatPe /Cred) & how does he make sure he doesn't lose the fund? Does CRED and BharatPe punish the defaulter in any way - Credit score impact ?
CRED and BharatPe are just a Distributor of this play (P2P lending). As per the RBI rules, no one can guarantee the Credit loss in P2P. So, default risk is with the individual lenders.
The defaulter is called every alternate day, house/office visited by the collection agents and notices are sent to the defaulter. In addition their credit score is impacted severely making it difficult for them to get any loans in future. Last but not the least, the lender funds are distributed in such small portions that a few defaults doesn't affect the return of the lender. There is enough and more margin to absorb even the highest expected default rates.
Great post.
I haven't received the deck for Flexiloan , could you pls share it at rohit.shroff88@gmail.com.
Many thanks
Just a correction, the deck that you have shared is of Liquiloans who have an in-house collection team. So they have setup something to answer the problem
We have highlighted the fact that Liquiloans is doing quite good (as of now). So, YES, they must be doing few things right. However, going by the Global experience, we will still maintain that P2P can't grow. Like what has happened in the US or UK, the bigger P2P players will eventually turn into Banks.
So the credit risk is borne by the lender (the person planning to park the fund in BharatPe /Cred) & how does he make sure he doesn't lose the fund? Does CRED and BharatPe punish the defaulter in any way - Credit score impact ?
CRED and BharatPe are just a Distributor of this play (P2P lending). As per the RBI rules, no one can guarantee the Credit loss in P2P. So, default risk is with the individual lenders.
The defaulter is called every alternate day, house/office visited by the collection agents and notices are sent to the defaulter. In addition their credit score is impacted severely making it difficult for them to get any loans in future. Last but not the least, the lender funds are distributed in such small portions that a few defaults doesn't affect the return of the lender. There is enough and more margin to absorb even the highest expected default rates.