India-China coalition to amplify P2P lending industry in India
The relationship between China and India has always been a roller coaster ride. From the spirit of “Hindi Chini Bhai Bhai” to the 1962 war between India and China, the political condition between India and China has always been like an ebb and flow.
Applauding P.M. Modi’s trips to the foreign lands and after his achievements accomplished through “Invest India”, India has caught the attention of Chinese Investors and have proven itself as the golden bird that could help them multiply their monetary resources. In 2017, the Chinese investors have invested an estimated amount of $2,000 million, triple the amount invested in the previous year, compared to $700 million.
One of the key areas where the Chinese Investors are now focusing on is the Indian P2P Lending industry. China has one of the largest P2P Lending markets globally. The scope and potential is wide and the Chinese industry is worth more than $158 Billion. However, the Indian P2P Lending industry is yet to discover its scope and its growth prospects.
Due to the blooming number of Peer-to-Peer Lending platforms in China, a gush of fraudulent cases came into picture. The Chinese Government developed a “Record Filling” System in April 2018 for P2P industry as the first step of ruling out the non-serious players from the Chinese market and introduce standardisation. Owing to this, number of Peer-to-Peer Lending platforms dwindled rapidly. While an average of 6000 P2P platforms were recorded in the Chinese P2P Lending platforms, post the “Record Filling” system, only 1883 platforms could manage to survive the stringent norms.
This strenuous time has encouraged the Chinese investors to see beyond the geographical boundaries and reach out to other countries. The scope and potential that the Indian P2P Lending holds is seamless and the Chinese investors are wishing to derive a favourable outcome from the given situation and economy of India.
I received a chance to speak with Mr. Raghavendra Pratap Singh (Co-Founder, i2iFunding) to know his opinion and perspective on the same who said, “Yes, it is true, that recently a lot of Chinese companies have contacted us for partnership and investment opportunities. We have had meetings with five Chinese companies out of which three are already running successful P2P Lending companies in China. Two companies have visited our office already and one is expected to visit in the upcoming week.”
“Most of them are looking for partnership with Indian P2P Lending platforms instead of pure investments. Currently most of them are testing waters and finding out the intricacies of Indian P2P Lending industry. They are waiting for the platforms to get P2P-NBFC license from RBI”, he further added.
“Chinese P2P Lending industry is huge and more mature than Indian P2P Lending industry, and Indian P2P players will definitely get benefitted from this partnership. There should not be any regulatory hindrances since latest FDI rules permit foreign investment up to 100% under the automatic route in - Other Financial Services. Other Financial Services will include activities that are regulated by any financial sector regulator viz. The Reserve Bank of India, Securities and Exchange Board of India etc. Such foreign investment shall be subject to conditionality, including minimum capitalisation norms, as specified by the concerned Regulator/ Government Agency”, he further added.