Consider an IT professional, working with one of the most reputed IT firm in the startup capital of India – Bengaluru. Earning a decent amount of salary, she is ignored by the traditional financial institutions for a simple reason that the purpose of loan is to renovate her house and convert it into a PG (to earn extra income). She gets registered and approved on RupaiyaExchange.com, her loan requirement of Rs. 1 Lac is listed and within 4 days she secures her funding from two lenders. It is this power of the peer or social economy which a Peer-to-Peer lending platform like ours would like to capitalize on.
Who we are and what are whom are catering to?
Headquartered in New Delhi, Rupaiya Exchange is apeer-to-peer lending platform which was launched in November 2015.
Ouraim is to effectively connect two set of stakeholders
- Unserved/ underserved borrowers
It is a misconception that P2P lending is only for bad profile/ sub-prime borrowers.
If we look at the current state of affairs, in the Indian scenario, the financial institutions do not cover the individuals with limited credit history (what we call ‘thin file’ cases) or individuals with no credit history (the ‘no hit’ cases) – these individuals in case of loan requirement scout for the unorganized market for fulfilment of their requirements. The lenders in this market are highly unorganized and cost of borrowing can go upto 4-5% per month.
Further, certain set of loans are not entertained by the financial institutions, especially when it comes to cases of startup funding.
We would like to effectively cater to this population – who despite having a good profile – have either no or bad credit score. Through an effective P2P mechanism we would like all (good profile) individuals to be able to borrow efficiently and at lower costs.
- From Investors point of view:
While there are set of unserved borrowers; there are individuals with short/ long term excess cash and looking for investments at a higher rate of return. Traditional products give an effective rate of return of 5-7% (post tax) while in case of equities, whilethe rate of return can reach upto 20-25%, the markets are highly volatile.
In case of peer-to-peer lending there is a possibility of earning upto 30% rate of return and that too with a fixed monthly cash inflow.
Market size and Opportunity
Currently Rupaiya Exchange is focusing on catering to consumer/ retail loan segment and gradually move to include the Micro enterprises.
The consumer finance market alone will witness an 18% CAGR to a US$1.2 tn opportunity by 2020 (Source: RBI, Credit Suisse Estimates).
Further, today the less than 30% of retail consumers have some kind of debt on them. Within this also about 36% of the consumers still borrow from unorganized sector.
Considering the above there is huge scope for both penetration in the already existing unorganized market and also take advantage of both increased financial inclusion and the increasing the market size.
Advantages and what is the USP offered?
From lenders point of view
With P2P lending the following advantages exist which gives one a higher flexibility and returns on investments by lenders:
- High Rate of returns
- Fixed monthly cash flows
- Curated list of pre verified borrowers
- Possibility of diversification among borrowers
- All operational activities with respect to liaison outsourced to the P2P lending platform
While the above objectives are very much prevalent on any P2P platform, on Rupaiya Exchange for example you have the following other unique benefits of investing:
- Safety of Capital through Lender Protection Fund
The biggest advantage of lending is that there is 100% principal protection at all times. Hence, while you earn higher interest returns, one is assured that the principal amount is protected.
- No Registration Fees or Investment fees
There is no registration fees to be paid by the lenders and there are no investment fees payable to use the platform. Whatever the rate of return you bid for comes to you directly without any payout to the platform.
- Flexibility in the amount to be invested
The investment amount starts from as low as Rs. 1,000 – thereby giving flexibility in diversification and spreading of risks.
From borrowers point of view
With P2P lending the following advantages exist for borrowers:
- Relatively lower Cost of Borrowing
- No prepayment fee
- Flexibility in borrowing amounts
- Collateral/ collateral free loans
- Reverse Auction process
- Relatively lesser documentation
- Is not dependent solely on credit scores
Further, the platform does not solely considers the traditional means of credit review (including CIBIL score, income details, tax returns etc.)–there are other parameters considered when making a credit decision, approving a borrower and allotting an indicative credit rating. These include social behavior, background review,education etc. We also consider state of affairs with respect to payment of utility bills/ mobile bills etc.
Founder and team
Founded by Rohan Hazrati, an experienced finance professional who, in his last assignment, served as CFO and Head Legal of a multi-billion organization working across multiple geographies. Having also worked with EY India and Grant Thornton,in their advisory practices, he has advised multiple clients across various industries and geographies.
We arecurrently a team of 7 with us consisting of marketing professional, credit underwriters and developers who have worked with consulting companies like EY and other startups. We are hiring currently also.
Current Traction and Challenges ahead
The website has seen traffic in excess of 1000 users with 21,000 page views over last 7 weeks.With more than 150 registered users the website has receivedthe total applicationsworth Rs. 1.4 Crore.
We have seen users and applications from across India register on our platform and the average ticket size today stands at approx. Rs. 1 Lac
Through our channel we have been able to close 9 loans recently.
The challenge today lies in changing the mindset of an average user – considering that Indian consumers traditionally have been very conservative when it comes to money. Moreover, Peer-to-peer lending being a relatively new concept requires lot of user education and constant interaction with them to establish a trust.
We are conducting regular meetups and lender meets for imparting education and benefits of this concept.Our aim is to become the first choice for borrowers for Alternate Finance and for investors as an Alternate Asset class.
Website:www.rupaiyaexchange.com
@RupaiyaExchange is a virtual market place for Peer to Peer Lending.
Rohan Hazrati (@HazratiRohan) is the Founder of Rupaiya Exchange. He has worked across geographies and in his last assignment was the CFO and Managing Director of a multibillion dollar enterprise.
You can write to us (admin@rupaiyaexchange.com)/ visit the website (rupaiyaexchange.com) or tweet us @RupaiyaExchange.