Neha Juneja, CEO, IndiaP2P express her views on various aspects related to the business while discussing with Business News This Week team.
- Can you tell us about your background and experience as an entrepreneur?
As a founding team, all three of us, Mohit, Ravinder and myself come with financial services and entrepreneurial experience. Before starting IndiaP2P, I co-founded and operated Greenway Grameen, a climate-tech and energy access business solving for the lack of clean cooking stoves in rural areas. Most rural Indian households still use mud chulhas for some or all of their cooking needs. At Greenway, I worked closely with women as end-users and distributors to witness how the self-help group and microcredit movement was seeing huge success on account of disciplined financial management by women. Ravinder was also lending to this borrower segment in his previous role at one of India’s largest NBFCs and Mohit was already developing fintech solutions for rural BNPL programmes when the three of us convened.
- How did you come up with the idea of IndiaP2P and what inspired you to start the company?
IndiaP2P enables investing in debt assets or loans sourced primarily from rural and semi-urban women business owners, which in turn pay monthly interest earnings to the investors who fund them. Over the past year, on average IndiaP2P investors have earned upwards of 16% p.a. in returns, beating most other investment products in the market.
The idea was born from our insights into this asset class – mostly rural, mostly women-owned small businesses. We witnessed that this asset class offers the best risk-reward profile of nearly all other assets and yet there is no avenue for retail investors to invest in it.
For the past decade or so, despite shocks such as demonetisation and COVID, the average NPAs or defaults in this segment are under 2%, whereas the average interest payout is in the range of 22-26%. For comparison, corporate defaults in India exceed 10%. This is a well-established and well-performing asset class worth nearly $100Bn but until IndiaP2P, there has been no way for investors like you and me to benefit from it while also enabling small businesses which are critical to economic growth and our country’s path to prosperity.
- What were some of the early challenges you faced and how did you overcome them?
The technology infrastructure required to operate IndiaP2P platform is quite extensive. It is almost an entire ecosystem starting with tech-enabled borrower sourcing and verification, integrations with banks and escrow operating trustees and so on. It has taken us time and a fair bit of resources to build this out and this was pretty much our early challenge.
Now, we are in a phase where we are still building awareness about this asset class. Regulated debt investments in India barely beat inflation in terms of returns which is why while debt can offer relatively safer, predictable returns, retail investors shy away from it.
IndiaP2P is a completely new debt investment product offering much higher returns while being passive.
Overall, the penetration of investments is still low in India making investor education initiatives and efforts important.
- Can you walk us through how IndiaP2P works for borrowers and investors? How do you ensure that the platform is safe and secure for users?
For investors, we have a quick, straightforward KYC process that takes less than a few minutes and is followed by a selection of investment products and risk profiles. As a passive investment product, no further effort or action is needed. Investors simply earn and receive monthly interest earnings.
For borrowers, like any credible bank or lending institution, we follow a thorough due-diligence process which includes in-person meetings, verification of home/business etc.
Borrowers with an existing, good credit history apply on
We engage with potential borrowers via our mobile app on which anyone with an existing, good credit bureau score can apply across areas where IndiaP2P has a local presence for quick physical verification.
- What types of loans and interest rates are available on the platform?
We offer loans up to INR 1lakh starting at 18% p.a. in interest rate for livelihood, asset purchase etc. Loan tenures are up to 24 months.
- What was the original goal or mission of IndiaP2P when it was founded? Has that mission evolved over time, and if so, how? What is the current mission or vision for the company?
Our original mission of enabling investors to invest in a productive, passive, high-returns asset class remains intact.
Over time, we are also seeing the value of enabling small, women-owned businesses whose growth is critical towards Indian becoming prosperous. While being financially prudent (women in India have higher CIBIL scores on average), women are also savvy spenders who invest in the progress of their families and communities.
Besides earning returns, our investors appreciate the positive impact of their investment.
- How do you see IndiaP2P shaping the personal finance sector in India, and what impact do you hope to have on the industry?
We are here to remove inefficiencies that exist in the debt markets with technology to deliver better returns to debt investors while closing India’s glaring credit gap.
In due time, we aim to become the defacto, first investment for every investor in India.
- Can you highlight the role IndiaP2P plays in addressing the credit gap for women entrepreneurs in India? Are there any particular success stories or examples you can share of women entrepreneurs who have used IndiaP2P to access funding?
Various estimates indicate that the demand-supply gap in small business lending is 2.5x i.e. we are literally not giving our small businesses enough credit. Under-funding, simply put leads to slow growth.
By making funding such businesses attractive in terms of earnings, IndiaP2P closes this credit gap is a direct, meaningful way.
The women entrepreneur segment within the sector is even more interesting where you have 70 million+ women with credit scores i.e. almost a quarter of all Indian households seeking loans for growth but facing additional challenges of bias – many lenders including prominent banks add additional hurdles for women to avail loans. These can range in the form of asking women to get NOCs from husbands/fathers to simply scoring them lower on a gender basis even though it is a fact that women on average have superior repayment behaviour and thus lesser default rates than men. At IndiaP2P, we are proud to be bias-free and do our best to make it easier for women to access the credit they deserve. Over 90% of borrowers on IndiaP2P are women. Most borrowers run small (for now) businesses such as shops, grocery stores, restaurants, dairy farming activities, finished goods production from local materials etc.
- How has IndiaP2P secured funding and grown over time, and can you share any plans for future investment or expansion?
We are venture funded by Anter VC and are one of the fastest-growing alternate investment products in the market. We will be simply doubling down on our borrower sourcing and scale investment product supply in the coming months to cater to more investors.
- What are your goals for the company in the next few years, both in terms of growth and impact? Are there any new products or features on the horizon that users can look forward to?
IndiaP2P is on track to become the largest platform for investments in the high-yield debt segment. Over the next few years, we aim to enable credit for millions of small businesses, especially women-owned ones to create real, measurable economic and social value add that progresses us as an economy and society.
- Can you tell us more about what makes IndiaP2P unique compared to other P2P lending platforms in India, and what do you see as your biggest strengths?
Our biggest strength and differentiator is the borrower segment or asset class we tap into along with our prior experience of lending here.
The segment we source from comprises India’s best borrowers, whichever way you analyse it and our risk management expertise further enables us to create investment products with the best risk-reward profile.
- How does IndiaP2P prioritize transparency and accountability for its users, and what steps do you take to ensure ethical and responsible lending practices?
We are lucky to be working under a regulatory regime which is designed for transparency, accountability and investor interest. P2P lending in India is regulated by the RBI with only licensed operators permitted. RBI in its regulation design has mandated the use of escrows, oversight of a trustee and more which makes P2P lending a keenly regulated investment product in India.
As regulation suggests, IndiaP2P only matchmakes between lenders and borrowers with fund flows undertaken via RBI mandated escrows. Each lender can also see exactly which loan fractions their capital has funded.
- How have you navigated regulatory challenges or changes that have impacted the P2P lending industry in India, and how has IndiaP2P adapted to these changes?
We are a late entrant into the sector, coming in at a time when regulation was already formalised. Hence, we are yet to see any major regulatory changes. We do keep a keen eye on the changes in the fintech regulation landscape.
- How do you envision the P2P lending industry evolving in India in the coming years, and what steps is IndiaP2P taking to stay ahead of these trends?
Technology has made investing and accessible over the past few years. In the last year, there have been several changes to debt investments such as removing tax arbitrage available to debt mutual funds and market-linked debentures which makes P2P lending even more attractive. The industry is on an upward trajectory and past the impact that COVID had across the lending industry. The success of the sector will depend on its ability to consistently offer inflation beating returns.
As IndiaP2P, we remain committed to offering the highest delivered returns in the sector.
- Can you share any notable milestones or accomplishments for IndiaP2P since its founding, and what you are most proud of as a company?
We are proud to have delivered the best in industry returns over the past 15 months since inception. What makes us most proud is to do so with a purposeful investment product that generates real economic value add and not speculative returns.
- Could you share any success stories or examples of how borrowers and investors have benefited from using IndiaP2P, and what impact has the platform had on their lives?
Oh, we are constantly inspired by our borrowers’ business and social acumen. Our borrowers run efficient businesses and are also increasingly tech-savvy. We have borrowers like Khadija from Palakkad, Kerala who runs a packaged foods business that she started from her personal kitchen and has subsequently expanded to a mechanized enterprise employing many others. She is now going in for a full-fledged branding exercise for her brand of delicious snacks brand Safa Foods. We also have long-term businesswomen like Jiva from Thiruvarur, Tamil Nadu who has been running the area’s most respected restaurant. With her IndiaP2P loan, she has expanded the covered seating capacity at her restaurant to cater to customers who walk in with their smartphones as companions.
- What are some of the key challenges or considerations for entrepreneurs looking to start a P2P lending platform?
Operating a P2P platform is a high-responsibility, compliance-heavy business and entrepreneurs must make necessary investments in systems and processes. We also believe that on the borrower sourcing side, focus on a certain borrower type works better as underwriting and risk management practices can be much sharper.
- What advice would you give to young and aspiring entrepreneurs who are interested in entering this sector? Are there any particular skills or experiences that you think are essential for success in this industry?
We are operating at the intersection of tech-led investing and financial inclusion. This is a very interesting space with interest pouring in from those interested in technology, financial services, or even the development sector. Our advice is that the primary focus of any enterprise in this space has to be on managing and mitigating risk. There is more than enough vibrance and scale in the sector to build a large business with a singular focus.