12% Club App enters P2p Lending- BharatPe


INTRODUCTION TO 12% CLUB:

BharatPe, a supplier of merchant payments and financial services, is enhancing its consumer offering by entering the peer-to-peer (P2P) lending market with the introduction of its product, 12% Club.
Individual investors will be able to borrow money using the app through BharatPe's P2P service and invest at 12 percent.

BharatPe has collaborated with LenDenClub for the consumer product and is now enrolling Liquiloans. With the same partners, the fintech launched P2P lending for its merchants back in 2019.

P2P lenders will be financing to BharatPe's merchants on its platform to maintain minimal delinquencies.BharatPe will be able to properly underwrite these loans based on business cash flows and help repay this credit by even removing a small amount from daily payouts because these merchants use BharatPe's payment infrastructure, the company claimed.

A typical non-banking financing company (NBFC), like Hindon Mercantile, will support the borrowing by providing loans to clients.

"We did a soft launch for the product earlier this month and think that is an acceptable alternative for stashing additional cash without taking on the significant risks connected with a stock. Additionally, it offers investors total freedom to withdraw from the offering at any time."

Since BharatPe has millions of merchants, lending to a tiny fraction entails no concentration risk."

Grover predicts that the typical loan term on the site will be between three and twelve months. Individual investors are currently contributing $5 million per month to BharatPe's 12% Club and $1 million in loan disbursements are being made.
Following a $370 million main and secondary investment round, led by new investor New York-based Tiger Global Management, BharatPe recently joined India's coveted unicorn league with a $2.85 billion value.

The majority of the growth was made possible via recommendations, but the software is still seeing close to 2500 downloads every day, according to the business. Earlier this year, BharatPe introduced its P2P lending by 12 Percent Club service to its staff.

P2P lending: What is it?

  • P2P lending is not a recent innovation.
  • The Reserve Bank of India included this service in the scope of its regulatory authority in 2017.
  • Even then, there were more than 20 P2P lending players on the market, but the RBI's restrictions made sure that only the trustworthy players with solid business strategies persisted in the industry.
  • P2P lending involves users who have money laying around lending it to potential borrowers who have been identified by the service provider.
  • The borrowers then make payments to these lenders on a predetermined schedule, either all at once or in equal monthly installments.
  • After RBI released its regulations in 2017, several of the segment's established players went on a fundraising binge.
  • RupeeCircle, Finzy, IndiaMoneyMart, and other well-known businesses in this industry are just a few.

What are the Risks?

  • Loan default is one of the major dangers connected with this type of lending.
  • Because peer-to-peer lending is an unsecured loan type, the borrower does assurance that the lender will be repaid in the event of a default.
  • However, the loan's unsecured status is partially to blame for its higher return on investment than other debt vehicles.

12% Club BharatPe: What is it about?

  • Customers can invest their savings at any time using the 12% Club app by selecting to lend money through P2P NBFC partners of BharatPe.
  • The processing fees and pre-payment fees for consumer loans, according to BharatPe, will not apply.
  • Additionally, the loan eligibility will be determined based on the consumer's credit score, their history of utilizing the Payback loyalty program, or their use of BharatPe QR to make payments.
  • Customers who invest via the app have the option to request a withdrawal of their money at any time, in full or in part, without incurring any fees.
  • The minimum investment is Rs. 1,000, and the maximum investment by one person is currently Rs. 10 lakh.
  • Over the next months, the company added, this will rise to Rs. 50 lakh
  • Additionally, customers can use the 12 Percent Club to get collateral-free loans up to Rs. 10 lacks with a 3-month term, according to their convenience, the release said.

CONCLUSION:

With the launch of P2P lending by BharatPe, Fin Techs are attempting to introduce innovative features to retain captive audiences within the ecosystem and allow them to earn and take out loans at rates that are reasonable compared to the market.