As the youngest player in the P2P lending sector, CRED announced that it is attempting to mitigate the risk factor by introducing a minimum credit rating for users looking to take out loans.
CRED, a fintech startup founded by Kunal Shah, will now lend its users loans from a pool of capital made up of their own contributions, according to TechCrunch report. CRED Mint will provide CRED’s 7.5 million user base with a return of up to nine percent.
The move marks CRED’s entry into the peer-to-peer (P2P) lending space, which has since seen an influx of fintech players. 2017. It is the platform’s first community-focused investment product that enables members to support their peers through credit and generate returns that are above inflation.
CRED members have an average of Rs. 2,000,000 in their savings accounts, according to data from CRED. The startup claims the program will make better use of its members’ untapped money and recognize responsible financial behavior by offering returns with minimal risk.
How will CRED mitigate the risk associated with P2P lending?
Like an Indian Express report, non-repayment of loans is an impending risk with P2P loans. The report states that the risk is that it is an unsecured loan that is not backed by guarantees and that the lender will not be able to repay anything in the event of a default.
Traditional P2P lending platforms invite review as they attract borrowers with poor credit history and low incomes.
However, according to TechCrunch, CRED’s users have a credit rating of 750 or higher, which proves their trustworthiness. The website states that this position puts CRED on a solid footing to address the insolvency issue. It added that more than 20% of people who take out a loan in a peer-to-peer service fail to repay it.
Kunal Shah said that CRED Cash, its credit instrument that has so far paid out Rs 2,415 billion in loans, has a default rate of less than 1%.
As of yesterday, CRED cash has a loan portfolio of 2415 crores, which makes us the leading fintech lender in India. With NPAs below 1% because of our creditworthy members.
– Kunal Shah (@ kunalb11) August 20, 2021
Shah told Money control that CRED Mint will be a pure invitation product.
“We expect a lot more demand than the capacity. We will not compromise on the quality of our loan book. With most platforms offering low-income group segments, the NPAs were high and the risk mismatch meant these platforms couldn’t get big, ”he was quoted as saying.
Details on CRED Mint
A company press release revealed the following details about the program:
- The investment of members deposited under CRED Mint is diverted through CRED Cash
- The company has teamed up with LiquiLoans, a P2P NBFC registered with RBI that will keep an escrow account on theThe money invested is forwarded directly.
- Loans are according to Shahs. paid at an interest rate of 12-13% opinion to ET.
- Users can invest between Rs 1,00,000 and Rs 10,00,000 in around two minutes with no commission.
- You can request a withdrawal online at any time with no penalty.
- If a withdrawal is requested, the money will be returned to the investor with interest within one working day.
- It is distributed to more than 200 borrowers on average.
Other players in the P2P lending business place
Faircent: It is a Gurugram-based P2P lending platform founded in 2013 by Nitin Gupta, Rajat Gandhi and Vinay Mathews. It is one of the first P2P lending platforms to start operating in the country.
Rupee Circle: Rupee Circle is a new age finance company that, according to its website, has a marketplace listing borrower requirements and investors funding those loans. It was published in 2018 by Ajit Kumar. founded, Abhishek Gandhi, Ashish Mehta and Piyush Saurabh.
IndiaMoneyMart: IMM is an online P2P lending marketplace that started operations in 2018 with Subhadeep Chakraborty at the helm.
clever: finzy is another P2P loan portal that was founded by Amit More in 2016.
Some of the other players are i2ifunding, Lendbox, LendingKart, Monexo, CashKumar and many others.
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