P2P INVESTMENTS
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Peer-to-Peer Lending (P2P)

Peer-to-Peer Lending (P2P) is a Reserve Bank of India approved lending and borrowing platform.
Individuals and Non-Individuals like companies, HUF, can participate in P2P Lending platform.
We at Vridhi Investment can help you in account opening and participate on the P2P platforms.

The banks borrow money from the investors commonly known Fixed Deposits and pay them a yearly return in the form of interest rates. The banks lend this money to those in need of personal and business purposes. The money is lent to the borrowers, and the banks charge an interest rate higher than the fixed deposit rates.

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illustration: Mr.X takes his money, say Rs.1 Lakh, goes to a bank and starts a fixed deposit @ 7% p.a. Another person Mr Z requires capital for expanding his business. He borrows Rs. 1 Lakh from the bank as a Business Loan at a rate of 15% p.a. The difference between the bank’s borrowing rate and the lending rate, i.e. 15% minus 7% = 8% is the bank’s profit.

Under the p2p lending system, an individual can borrow money directly from other individuals by registering on a peer-to-peer lending website.

Thus, you skip the services of institutions like the banks, increasing the possibilities of generating higher returns on your investment.

Different types of Loans which your money is lent as.

  • All financial institutions raise money in the form of fixed deposits, bonds, debentures, etc. If you notice the rate of returns on these instruments, they are always almost similar, meaning not much difference. FD’s may give you 6%, Debentures 8% and the Bonds 7% with small variations. This money raised at an average rate of 6% to 7% interest rate is lent in different forms and at different rates, a few examples are
    • Housing Loans: 8% to 9%
    • Vehicle Loans: 10%
    • Business Loans: 12% to 15%
    • Personal Loans: 15% to 18%

Credit Card Loans: 36% and above
Your money is lent at average of 12% to 15% while you make not more than 6% to 7% *(All rate estimates as on Oct’2020)
P2P or the Peer-to-Peer platforms allows you to lend the money directly to the above borrowers, and you enjoy the benefits of higher returns that that of a fixed deposit or a bond.

The Peer-to-Peer Lending System

How to proceed?

  1. Open an account with a P2P lending platform at Vridhi Investment.
  2. Transfer money to the escrow account.
  3. Start choosing the borrowers and start lending.
  4. Receive a better return on your money than a fixed deposit.
  5. Reinvest or choose to withdraw the money as and when received.

Rs.50 lakhs is the maximum amount allowed per PAN number and there is no minimum entry amount. *As on Oct’202
Vridhi Investment has tie-ups with peer-to-peer lending platforms, you can choose them if you wish to.
Vridhi Investment will support you as an intermediary based on your expectations and will provide timely information.

The peer-to-peer lending is yet another option which you, as an investor, can choose to park some money as per your risk-taking ability, goals and expectations. This lending system provides another option to diversify your portfolio by becoming a lender directly. The awareness is yet to take off; hence this also is the right time to start and get better yields. As the awareness increases and the market gets crowded, the yields will surely come down. You have a chance to reap the benefits for a few years to come.

Once you decide to open an account and invest, we will help you understand the interface and learn how to lend to various profiles as per your profile. The system is quite simple and easy to understand. We hope you have an exciting experience with Vridhi Investment and can call us anytime for all support you may require. Do share this page with your friends and relatives and introduce them to the system.

P2P Lending FAQs

We are sure you have read the concept of peer-to-peer lending popularly known as p2p lending and reached this page as you are interested in knowing more and finally investing through the platform. We know you may be having many P2P Lending FAQs.

We at Vridhi Investment have the skin in the game. We have invested our own money through p2p platform. After being satisficed considerably, we have started letting people know about the concept. In this regard, we are posting below most of the doubts an investor can get on peer-to-peer. Have a through reading, and we will keep updating the unique question which may come in future. You can decide to invest or not to invest after reading all the faqs. Here we go:

It is 100% legal and comes under the governance of the Reserve Bank of India. You can find the list of all licensed P2P companies in India on the RBI website.

2. Who can register to lend and who can borrow on p2p platform?

1. Any person can register to lend or borrow.
2. A person can register either as a borrower or a lender. You cannot play both roles.
3. The lender has to keep ready photos of Address Proof, PAN Card, and Cheque leaf photo to be uploaded during the account opening.

3. What is the procedure for registering as a borrower?

1. A borrower is basically taking a loan; hence the company will do all risk profiling before registering them and allowing them to borrow money.
2. Just like banks and other NBF’s, P2P companies will also check the borrower’s profile, his CIBIL ratings, his history, and all other aspects. Many P2P companies also go the borrower’s home and office for physical verification.
3. The P2P company may also assign their internal rating over an above the CIBIL for investors to make better-informed decisions.

4. How is the lending done, and how is the risk diversified on Peer-to-peer platform?

1. A borrower can come on the p2p platform to raise say Rs.100000/- for 36 months at an interest rate of 16% per annum.
2. His loan requirement will be listed on the p2p platform with all risk profile details except the name and religion of the borrower.
3. As a lender, you can lend him as low as Rs.1000/- or more. There may be a possibility that 100 people fund this borrower with Rs.1000/- each. This brings down your risk to just 1000 in case the borrower defaults. You can choose to lend higher also based on the profile.
4. Assuming the borrower is fully funded with Rs.1 Lakh. His EMI payable to the P2P company will be Rs.3515.70 per month.
5. The P2P company will start paying you your share of EMI Rs.35.16 on your 1000 for the next 36 months less the P2P fees.

5. What are the charges the P2P companies charge?

1. The company with which we have tied up charges 2.5% + the taxes which amounts to 2.95% in total.
2. When you register through Vridhi Investment, nothing extra is charged, but you get the services of Vridhi.

6. What can be my return on investment?

1. There may be numerous loans listed.
2. The rate of interest rate will depend on the profile of each borrower, also the internal rating of the p2p company.
3. A borrower with a good credit score may borrow at 12%, and a borrower with a moderate profile may borrow at 20% or even above.
4. As a lender, you can lend as low as Rs.1000 to Rs.5000 based on the profile. Hence, diversifying your portfolio.
5. Assume your average return is 16%, less P2P fees 2.95% less any default if any, let’s assume its 2%, hence your Nett Return will be 16-2.95-2 = 11.05%

7. What are the chances the borrower will default?

1. Theoretically, anyone can default. Practically since all the borrowers are individuals, the chances are less. Also, since your portfolios will be diversified, the risk reduces to negligible.
2. As an individual, a person will try not to default since it harms his Credit Score! No one will wish to harm his score for small amounts. P2P limits loans to a person between Rs.3 Lakhs to Rs.5 Lakhs. Practically most loans are just around Rs.1 Lakh. No one will damage his score for just a lakh.

8. What are the chances that the P2P company itself defaults?

1.Again theoretically, any company can go bust. Even banks have gone bust in India. Practically, since a p2p company is just a middle man between the lender and the borrower, hence the borrowers will have to continue paying the EMI’s as they are connected to the CIBIL.
2. All the unused amount and the EMI’s are credited in an escrow account, meaning the company can use the amount only for lending purposes and not for their own purpose.
3. All reports are available on the p2p website.

9. What happens when a borrower defaults?

1. As mentioned earlier, all borrowers are screened by the p2p company.
2. In case a default happens, the next steps are taken as per RBI laid rules. You would have seen how recovery agents work No one would take such pain for small amounts.
3. The final step is filing an FIR and getting the borrower arrested.
4. When the amount is recovered, it is paid back to the investor; else it becomes an NPA.
5. There are no extra charges over and above the p2p fee. Costs of these steps are included in the fee.