Peer to peer lending: Opportunities and risks
Peer to Peer lending industry is a growing industry, which saw its start in the year 2014. But, since the start and having the industry roots just for 3 years in the running, the P2P Lending has escalated to the figures of 20 crores in the market.Atit Shah
Peer to Peer lending industry is a growing industry, which saw its start in the year 2014. But, since the start and having the industry roots just for 3 years in the running, the P2P Lending has escalated to the figures of 20 crores in the market.
But is the industry, providing you full proof opportunities for the benefits? Is the industry a reliable option for many, who are considering it as a source of profit through their hard earned money being utilized as an investment?
Thus, this industry must not be looked as just a child having no powers to bring a noticeable change in the Indian market.
Here is the analysis for some opportunities and risks involved in P2P Lending Industry:
Opportunities and Benefits
Several key factors associated with this lending industry has made this industry as one of the fastest growing lending segments in the Indian Market.
With numerous opportunities and benefits attached to this concept of lending, the P2P Lending can be called as a highly effective lending business of today.
Here are some benefits and opportunities presented to the players in this segment:
Option to earn 16–22% returns
It’s a known fact; we invest to come up with returns! If the returns are low, things need to be changed. Coming up with a higher return imbibe a sense of confidence among people towards more investment.
With P2P Lending options, the doors to earn higher returns are open and more often people come up with the returns in the range of around 16% to 22%. Even, when properly done, some come up with returns of as high as 27%.
Asset class with returns is more stable comparatively stock market
The stability is one factor, which makes the peer to peer lending as one of the classes. Even in recession times of 2008, the markets crashed, but the people who wisely invested their money in this lending were lucky enough to return with the handsome profits. What kind of stability more than this is desired?
With the peer to peer lending, the option to enough freedom comes. With more profits in the investment, more freedom comes towards the lifestyle.
At the same time, the P2P Lenders offer enough freedom to the people, who are under extreme pressure to come out of debts. This industry is in fact, presenting an opportunity to the investors to invest and offering a helping hand to the needy ones.
Risks involved in the P2P Lending
With the opportunities and benefits, everything comes with the negative sides of their own. Same is the case with the P2P Lending, which has its own downsides.
Here are the risks involved in the P2P Lending:
Lack of regulations poses systemic risks sometimes
At present, this sector is still an unorganized sector in India and the road the organized sector is on its way. As of now, the lack of regulations thus poses some risk in the investment process and some may get troubled because of this aspect.
Rough patch in recent past
There have been some cases with the P2P Lending agencies, for which the P2P Lending was not a sweet memory. The troubles all over the world have been noticed in the case of working process and its violation of policies and thus many top level directors had to resign from their respective companies.
Some events in India, have pointed out to the need of fixed regulations for the Industry.
Even, the debate on the advantages and negative aspects can continue in the market, the P2P lending industry in the country is on the rise since its inception and more people are showing the interest in the field. The readers who are reading this, are the live examples of this interest!