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27/02/2019 03:16pm

Banning of unregulated deposits will attract SMEs to invest though regulated institutions: P2P lending players

image Banning of unregulated deposits will attract SMEs to invest though regulated institutions: P2P lending players

New Delhi, Feb 27 (KNN) The latest ordinance of the Banning of Unregulated Deposits (UDS) 2019, passed by the government will attract attention of small investors to invest though regulated institutions like NBFC-P2P platforms that provide highly transparent environment under the guidance of the RBI, said a P2P lending player.

This will create fear amongst salaried individuals and SMEs who borrow from small brokers and payday lenders at very high interest rates, CEO of Bengaluru based P2P lending platform Cashkumar, Dhiren Makhija said.

He said, “All these small players who have enjoyed such lending business without legal norms would now fear the law and eventually seize to exist.”

"We are covered under the ordinance, being a regulated player by the Reserve Bank of India and we strongly believe that there is an opportunity for P2P players to tap such loan seekers and provide them better services and interest rates. P2P will not only aggregate this disorganised lending segment but also create a great asset class for the common man" said Makhija.

Founder and CMD of PaisaDukan, Rajiv M Ranjan said that the industry is at nascent stage currently and such a positive step will help this lending industry to establish itself as one of the best investment option in the market.

Adding to the above statements he said, “In India, a lot of people & SMEs are heavily dependent on informal resources for their needs where transparency has always been an issue. It is time for P2P lending players to move ahead with awareness campaigns to onboard such depositors to digital India economy through regulated platforms which are highly transparent and secured."

Founder and CEO of Hyderabad based P2P lending platform PeerLend, Sanjay Darbha said, "This ordinance will help P2P lending sector in more ways than one. Firstly, all transactions carried out on NBFC-P2P lending platforms are regulated by way of P2P master guidelines set by the RBI.

He added, “I believe this will increase demand for formal credit and should be an upside for the P2P lending sector. NBFC-P2P lending platforms can become a formal route for many of the small-ticket informal transactions that are normally ridden with high transaction costs and significant collateral needs. P2P lending can finally emerge fully as a new asset-class for individual lenders in India." 

Ordinance was passed by the government to provide a comprehensive mechanism to ban UDS as well as to protect the interest of depositors. This is in line with the Reserve Bank of India's guidelines on the NBFC-P2P sector, issued in October 2017 to regulate the unorganized lending business in the country.

This will also motivate small borrowers to do transactions through certified financial institutions only. (KNN/JM)

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