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In a bid to stay ahead of its competitors, peer to peer (P2P) lending start-up Faircent has slashed its interest rates to 9.9 per cent on consumer and business loans. The interest rates for consumer loans for most banks and NBFCs range from 10.9 per cent to 23 per cent.
The Gurugram-based company, which was the first among P2P lenders to receive the certificate from the RBI to operate as an NBFC-P2P, slashed interest rates last week for both lenders and borrowers for unsecured loans.
Talking to BusinessLine , Faircent’s Founder and CEO Rajat Gandhi, said: “This interest rate is the lowest in the industry and the idea is to unlock the supply side of people having money by giving them a list of good borrowers.”
Faircent uses AI, machine learning and predictive analysis to evaluate the borrowers on 100 points before giving out loans. It has created a new category of ‘prime borrowers’, whose earnings are not less than ₹1.5 lakh per month, and have a Cibil score of 750 and above.
“One needs to be very creditworthy to be able to avail these loans at such low rates, and for lenders also it makes sense to lend at 9.9 per cent for short-term loans at a time when other investment instruments such as MFs and markets are not faring well. With volatility in the market, there is good demand for such alternative ways to make money. We are trying to unlock the huge amount of seed capital that was going towards other means of investment,” said Gandhi, adding that Faircent’s customers are bank customers who are in need of instant loans for buying consumer durables.
The company, which is witnessing a 20 per cent month-on- month growth for the last several months, is looking at 10,000 transactions within the first two months itself.
“We are constantly looking at ways to address the country’s credit deficit with our innovative technology-led offerings,” said Gandhi, who founded Faircent along withco-founder, Vinay Mathews, in 2014.
Escrow account
To keep its NPA and default rates at the lowest, Faircent has created an escrow account for lenders for faster and smoother flow of funds, enabling them to make greater returns on their investments. However, the loan amount for a borrower cannot exceed ₹10 lakh at any point in time across all lending plaftorms.
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