By Piyush Shukla

The peer-to-peer (P2P) lending industry will likely reach Rs 7,000-Rs 8,000 crore in gross loan volume by the end of the next financial year, Faircent founder and chief executive officer (CEO) Rajat Gandhi has told FE in an interaction. “Next year, on an annualised basis, I think, the whole industry should be around Rs7,000 – Rs8,000 crore, at least Rs5,000 crore. After that, subsequently, it should be Rs10,000 – Rs12,000 crore upwards,” he said.

P2P lending is an alternative financing method that allows individuals to avail loans from other individuals through online lending platforms. Presently, the Reserve Bank of India (RBI) allows P2P platforms to conduct only unsecured lending. Gandhi said Faircent is engaging with the RBI on the issue and the regulator should allow asset-backed secured lending, especially products like loans against property and vehicle loans on P2P platforms for industry growth.

Gandhi said presently Faircent is enabling over 30,000 loans every month to be generated on its platform, which amount to over Rs 120 crore. To date, loans totaling Rs3,100 crore have been passed on the P2P lender’s website and the company is aiming to facilitate another Rs2,000 – Rs3,000 crore in the next fiscal year.” After that (FY23), we should double up for the next two-three years continuously so that it is around Rs10,000 -Rs12,000 crore,” he said.

On asset quality, Gandhi said during the first wave of Covid-19, Faircent witnessed 10% default rates, which fell to 4-5% during the second wave, and presently the company is witnessing a default rate of 2-2.5% on the back of better than pre-Covid level of collections.

On whether Faircent will apply for a traditional NBFC licence, Gandhi said the company was not interested in gaining one, however, it is keen on getting a digital banking licence once the regulations on the same are formed.  “Traditional NBFC (licence), we are not interested, what we are more interested in is digital banking licence, which the Niti Aayog paper talked about introducing in India and it is being introduced in parts of South-East Asia, the UK, Europe and South America. So let us see when the contours of those come in.”

“We are quite interested into getting a digital banking licence and we believe we can get a good one because we understand the asset and liabilities side because we run a P2P platform. Most of the neo-banks do not understand the liabilities side,” he said.