V. RAMAN KUMAR

cent from the lender and 2- 4 per cent from the borrower as a ‘ fee’. The platform does value addition for the lender by carrying out due diligence on the borrower and provides its risk assessment. And, it assists borrowers by putting them in touch with the lenders. Each loan to a borrower is actually syndicated to threefive lenders so as to spread risk. Also, lenders can compete with each other in a reverse auction process – the lender willing to lend at the lowest rate usually wins. This also helps the borrower.

However, the platforms say, while default rates are extremely low currently, the risks are borne by the lenders and this is clearly articulated to them when they sign up. The low rates of non-performing loans at an average of just about 1 per cent are right now a function of the size of the industry. “Everybody knows how cumbersome the legal process is if somebody defaults. So, we build safeguards by having better scrutiny before disbursal,” says Shankar of i-Lend.

And, finally the direct selling agents ( DSAs). Gaurav Chopra, Founder of app-based IndiaLends, is a loan aggregator, who works with 30 financial institutions like Tata Capital, Bajaj Capital, Fullerton, HDFC Bank, ICICI Bank and IndusInd. Unlike the old DSA who was essentially a middleman, Chopra claims to be more than a “lead generator”.

“We assess the customer risk by looking at their online profile, bank statement scraping, etc. Unlike CIBIL, we provide a free credit report to anybody who applies to us. All our documentation is on the app. We then work with the RBI- registered