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Fintech

Published on: May 30, 2022, 2:40 p.m.
The peer-to-peer approach of India P2P
  • Juneja wants to be the most efficient operator in the space

By Lancelot Joseph. Executive Editor, Business India

Peer-to-peer lending has been around since 2012, but it came under RBI’s regulation in 2017. “In growing economies like India, there are always pools of high-quality, high-yield (high-returns) debt available, which makes for a great investment opportunity,” explains Neha Juneja, CEO & co-founder, IndiaP2P. “However, these pools are not available to retail investors and, when they are, much of the yield or returns go to institutional intermediaries. The ‘India’ in our company’s name signifies our vision of making India prosper! IndiaP2P removes this intermediation and delivers all of the yield to retail investors, by taking a peer-to-peer approach; hence, the P2P.” 

Based in Mumbai, Juneja founded IndiaP2P in 2021, in tandem with investment and fintech specialists Ravinder Voomidi Singh and Mohit Gupta. Juneja had previously built and scaled Greenway, India’s largest clean cook stoves enterprise, with operations across rural India and sub-Saharan Africa. For a decade, Juneja worked on the ground with microfinance operators and rural self-help groups, who were distribution channels for Greenway, as well as international asset managers, who offset carbon emissions through Greenway stoves projects.

While on the field, Juneja discovered that loans given to semi-urban and rural women business owners in the country were growing strong and had the lowest defaults; yet, there were limited avenues to source capital for these loans, with much of this capital going through multiple intermediaries or hoops, before it reached borrowers. So, she launched IndiaP2P that makes high-yield debt investment products for retail investors. The company’s first investment product bundles high-quality loans from women business owners that yields up to 18 per cent per annum.

“We started operations earlier this year after a fund raise from Antler VC,” observes Juneja. “As a fintech, we want to be the most efficient operator in this space, where fees charged to investors is typically high. We intend to continue being the lowest fee platform by being tech-first and low on overheads. In this short span, we have already delivered three cycles of projected returns to investors”. With IndiaP2P, while lenders are onboarded online, the company meets with and physically verify all borrowers, whose loans become a part of its investments. 

Good returns

“We see immense potential for IndiaP2P to become the default platform in this space for retail and sophisticated investors,” discloses a fund manager at Antler India. “Its first flagship product has yielded a return of 18 per cent per annum, by disintermediating access to a bundle of diverse, risk-managed MFI loans – an over $30 billion space in India”.

“Our borrower engagement and sourcing are done through on-ground personnel across multiple states in the country, who serve cachements of over 100,000 borrowers,” adds Juneja. “Our lenders or investors come from a variety of backgrounds and professions from youngsters savvy about investments to retirees. On the borrower side, our focus is indeed on women borrowers of India, who have higher credit scores than men and are known for superior repayment behaviours. With focussed sourcing of loans from women business owners, we are able to build a lower risk product for investors”.

She aims to be at the vanguard of high-yield debt products in India by removing intermediation and also by being the lowest cost operator in the space. IndiaP2P generates revenues by charging borrowers and investors a nominal fee.

Globally, there is an increasing interest from retail investors in passive investments and IndiaP2P investments fit into this trend. Another tailwind factor supporting this segment is the fact that these investments are productive – leading to real economic activity – and not speculative, which is why there is also clear regulatory support behind this investment segment.

“During this fiscal, our priority is to expand upon our field network for borrower sourcing, ensuring that loans from high-quality borrowers from across the country are available to service demand from investors,” Juneja explains. “We are consistently delivering more than 17 per cent in annualised returns to investors. Our immediate next milestone is to reach a Rs2,000 crore as our AUM.” 

Retail investors have put more money in the stock markets than institutional investors (domestic plus foreign) for the second year in a row in 2021. However not all have been as lucky with the returns, given the market volatility and ensuing corrections.

What sets IndiaP2P apart is its focus on the most reliable category of borrowers in India – women. “They make the best borrowers, because they have been found by research, time and again, to be conscientious, on-time, and disciplined re-payers. Yet, the bulwark of the financial system in India, including people’s mindset, is geared to neglect their borrowing habits and favour male borrowers, despite higher chances of their default”, observes Juneja, while expecting to grow at more than 31 per cent between 2022 and 2026. 

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