5paisa Loans Blog

How lending is the new way of investing?

By Anurag Srivastva | 24 Mar 2020

An investment is all about smart allocation of your capital in search of higher returns. A new and lucrative investment option that has emerged in the last couple of years is P2P (peer to peer) lending. This is a digital lending process where you invest in bonds or other debt instrument. The only difference is that the returns are substantially higher and you can choose the borrower.

Digital lending leverages heavily on technology. There are borrowers who need money and there are lenders wherein you can participate. Returns on digital lending can range anywhere between 25% and 35% annualized in India. As a digital lender, you just don’t lend to any random person. The complete debt profiling of the potential borrower is done by verifying CIBIL score and track record on payments based on their PAN number. An additional Aadhar authentication is also included to give you that added layer of safety.

The good news about digital lending is that it is already an Rs.300 crore industry and insiders expect this size to grow closer to Rs.30,000 crore by year 2023. With RBI insisting on the NBFC-P2P license, you can also be assured of organized and regulated growth.

Is online lending risky? Obviously, any high return product has its share of risks. This platform manages the risk by enabling you to lend to a person with a good track record and whose background is verified using the power of technology. Like any high return investment, this option also has its own risks. But if you have the risk appetite, then digital lending can be a good alternative investment option.