I-Lend Introduces Social Lending in India

Borrowers can apply for loans anywhere between Rs.25,000 – 3,00,000 and maximum period of 3 years. The minimum interest rate offered is 12%. Lenders can offer anywhere between Rs. 5,000 - Rs. 3,00,000 and can lend to multiple borrowers.

“I was an entrepreneur before when I set up India’s first indigenous POS Company Extredge POS Systems Ltd. It was rated as the second largest POS brand in India by IDC in the late nineties with VC assistance which I subsequently sold to Bartronics. I spent a few years working as a SVP, CEO in companies like Bartronics, TVSE, and VTX Industries before commencing this venture which is my second one,” says VVSSB Shankar. The co-founder Niti Gupta, an MBA from TAPMI, teamed up spearheading this effort. Suresh Jayanthi, Head Business Development, has over 15 years of experience in a variety of organizations including an IT MNC, Oil & Gas PSU, Manufacturing, Small Organizations and Startups.

I-lend operates in a typical 2-sided market consisting of borrowers and lenders. Both sides consist of real people. I-lend is a platform which brings borrowers and lenders together using the internet to reduce costs and friction. I-lend also adds value by verifying the borrower and documenting the loan transaction. I-lend’s implementation of the P2P lending model also helps lenders manage risk by providing credit inputs regarding the borrower and the lenders can lend a part of the loan requirement of borrower thus limiting the risk of default on any particular borrower.

On i-lend, borrowers can put up a loan request (after a two stage approval process which includes physical verification of address, employment, ID and income proof) for a particular tenure and indicate the interest they are willing to pay. They can approach lenders or lenders may approach them and the loan is then agreed upon & closed on i-lend platform. One loan request of a borrower can be met by multiple lenders.

Typical Borrower Side Workflow

1. A borrower creates and activates an account on i-lend.in
2. He registers his account and provides personal and financial details
3. A two step verification & approval
4. User can put up a loan listing describing parameters like amount, tenure of loan, interest/EMI, purpose of loan and videos or images convincing the lenders about the loan request
5. Browse lender listing and approach lenders or be approached by them
6. If one lender is willing to lend the entire loan amount, negotiate the interest rate and close the loan
7. Loan documentation, handover EMI cheques to i-lend. I-lend keeps the loan agreements in safe custody
8. Once loan is paid off, the loan agreements are returned to both the parties

Typical Lender Side Workflow

1. A lender creates and activates an account on i-lend.in.
2. He registers his account and provides personal and financial details
3. One step Verification and approval via PAN card, address proof and photographs.
4. Browse borrower listings and approach borrowers. Borrowers may also approach lenders on i-lend.in
5. Negotiate and close the loan
6. Loan documentation, handover loan amount cheques to i-lend. I-lend keeps the loan agreements in safe custody
7. Once loan is paid off, the loan agreements are returned to both the parties

I-Lend is currently working to tie up with a bank for transaction enablement.

“MFI in India has been much maligned over the years, some justifiably and some not so. However with the strict regulatory framework, windfall profits and unscrupulous practices have become much more difficult to manage and we can see a consolidation in the sector occurring as we speak. MFI’s Achilles heel was always its cost of funds coupled with the risk profile of the borrowers it is well nigh impossible to lend below a certain rate, which is considered punitive. This means that the rate of defaults due to interest rates and other socio economic factors, such as the viability of these small businesses, throws up several challenges for the sector. Incidentally, MFIs do not lend to agriculture and focus only on petty traders and SHGs whose wherewithal to repay isn’t quite high. Having said that, we expect the MFI sector to traverse a tough road in consolidation and reduction in margins necessitating them to use technology with an objective to improve margins and cut costs. Moreover we shall see increased visibility from the Political and social sectors and this is something the sector will have to live with”, says Suresh sharing his insights on the Micro-Finance sector in India.

Currently, the informal lending business in India is Rs.47L Cr of which 35% (16.45LCr) is in urban space with most borrowing done from family & friends. This is an unorganized form of peer-to-peer lending. I-lend is specifically targeting

I-lend is first of its kind model in India. This model has been in existence for the last 7-8 years in the US & UK and have been very successful and it is expected to reach a market size of USD 5 Billion (Gartner Report) by 2013.

What makes the model attractive is the opportunity for lenders and borrowers to interact with each other to reach an “agreement point” for a loan transaction. In case of banks, the borrowers have no opportunity to negotiate their interest rate and lenders returns are also fixed on various options such as Savings account and Fixed deposits.

While i-lend uses the basic concept of P2P lending, some of the processes have been suitably modified to the Indian context with borrower verification being more stringent and every borrower undergoes a physical verification of his residence and employment.

We are currently operational only in Hyderabad and plan to go national by end of the year. I-Lend has managed over 150 signups from both borrowers and lenders in just one month. Loan transactions completed within first month of operations.

Borrowing a loan, or planning to lend some amount? Give a look to i-lend, here.

[Image Courtesy: investmenteurope.net]