Mumbai: With technology enabling the creation of a platform that can assess the credit profile of the last mile borrowers, loans will be available to borrowers within a minimum of two hours and maximum of 12-18 hours but on the same day, as against the 2-3 days it takes currently. This was one of the key regulations set by RBI in its P2P lending consultation paper. A majority of banks and NBFCs are yet to have this facility. The highlight of the programme is an algorithmic model build based on artificial intelligence, that will be used for reviewing borrower’s credit worthiness.
It is coded to identify a borrower’s financial trend and allocate credit score based on the trend. The rating will automate allocating interest cost vis-a-vis risk factor. Rating is on a threshold of 55-100. If the borrowers credit profile is 100 then interest rate will be 12.5 per cent and if 55 then it will be 30 per cent, said Mr Bhavin Patel, CEO of LenDenClub said. (LenDen is short of the Hindi lena,dena) “In addition,” he said with this new platform, “zero manual intervention shall not only expedite the entire process, but shall also facilitate in mitigating defaults through unbiased and accurate credit risk analysis.”
The company which is among the top three that have this sort of platform, has dispersed 400 loans, each of `1 lakh and upwards. It caters primarily to women entrepreneurs and salaried individuals who have to pay credit card dues or repay high cost loans etc. Banks don’t finance such customers due to salary constraints — they finance those who earn upwards of Rs 28,000 to Rs 30,000 and LenDen’s customers earn around Rs 12,000 and want loans of around Rs 25,000. The default rate is barely 0.3 per cent said Mr Patel.
“We do have plans to use technology like block chain in our transactions and this platform is made by keeping such future aspects in mind,” said Mr Patel. In block chain the technology affords different encryption so there is little chances of hacking or cracking. If a hacker tries to hack into the platform access will be stopped within a few minutes. This will be implemented when payment automation is incorporated in the system. It will take about three to nine months. The regulatory requirement is expected by the end of this month, Mr Patel said.
This upgradation of P2P platform will accomplish a major milestone and prepare them for payment and digital signature automation to bring 100 per cent automation in the lending process through right technology for borrower identification, data collection, digital signature usage etc....