JM Financial Products Ltd – a subsidiary of JM Financial Ltd, an Indian financial services firm – has agreed to acquire a 9.84% equity stake in peer-to-peer lending platform Faircent for an undisclosed amount of money, according to local financial publication VCCircle.com.
Founded in 2013 by Rajat Gandhi, Vinay Mathews and Nitin Gupta, Faircent is currently the largest peer-to-peer lending marketplace in the country, offering both personal and business loans through a reverse auction system. An automated underwriting system assigns the loan period, loan amount and indicative maximum interest rate against each borrower’s profile. Lenders can make offers to fund a borrower’s requirement at similar or lower interest rates than the rate assigned, which the borrower can accept or refuse.
In October 2015, Faircent raised an undisclosed amount of funding from Aarin Capital Partners, a financial advisory firm in Bangalore. As a part of the deal, Mohandas Pai, designated partner at Aarin Capital, joined the advisory board of the platform.
Although the Indian P2P lending sector is at an early stage in its development, it looks increasingly like a crowded market. Currently, there are around 30 FinTech start-ups in the Indian peer-to-peer lending space, with nearly 20 platforms launched in the last year alone. Apart from Faircent, other players are Kiva.org, Rangde.org, Milaap.org, Lendbox, Cashkumar, i-lend and Easyrupaiya.
This investment comes just a month after the Reserve Bank of India (RBI) initiated steps to regulate the nascent P2P lending sector in the country, as AltFi reported last April. The local central bank is close to publishing a concept paper on peer-to-peer lending and will hold consultations with the Securities and Exchange Board of India (SEBI) – India’s capital markets regulator – before finalising the rules.
At the moment, Indian marketplace lending platforms are regulated by the same laws that apply to other Non-Banking Financial Companies (NBFCs), but a specific regulatory framework may well be released soon.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.