Social Lending in India

One thing that always baffles me that: Most banks charge about 15-27% on personal loans while they pay a minuscule 7-7.5%

These days, I am exploring the merits of creating a platform through which a person (esp. Indian citizens) can seek loan from their friends and family. This way the borrower can have access to cheaper credit, while the lender could either earn higher interest rate or get the satisfaction of helping a friend in need. (And being a friend indeed)

The features that I was seeking were:
1. Ability to connect to various social networking sites: Facebook, twitter, linkedin
2. Ability for an individual to bar certain individuals to know that they are in need of money.
3. Viral Marketing: A person can endorse his friend and spread the news of his requirement amongst his friend circle.
4. provision of anonymous lending (you can help your friend without him knowing that the money is from you)
5. Since charging interest might be awkward amongst friends, there would be a provision to donate interest to charity.

The first version of the website will be basically a forum where individuals can post their needs. They can subsequently contact each other and negotiate the terms and conditions of the loan. There would be no charge for such a service.

In the second version, we intend to add a few fee based services:
1. The borrowers would have a chance to get their documents verified, and deposit with us for safekeeping till the loan is not fully paid back. We are working with NSDL to incorporate hypothecation of shares and securities.
2. Lenders could use our bank accounts for transfer and collection of funds.
3. There would be a provision for an auction to determine the min. interest charged.

However I would really need your feedback (on ankur@enagar.com) about what features should/should not be there and how I can promote and popularize this initiative

Update: 11 Dec 2013: I have launched the beta version of the P2P crowd-funding website

 

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10 thoughts on “Social Lending in India

  1. Hey Ankur, this is a very interesting initiative!

    Self-organisation is our best way to survive, and social networks and Internet are here to help us.

    Are you thinking to release the source code in an open-source licence (e.g. GPL), let the user control who can access to their data, and open the development to external contributions?

    Which software technologies are you thinking to use?

    I wish you the best in this project.

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  2. we are using php, mysql and other web based tools to integrate the APIs which the social networking sites provide.
    Financial transactions are very tightly regulated. As a result we are developing initially for the Indian Markets. However if you want, then we can start developing for the French Markets too (after the first phase is completed) However you will have to take charge of modifying/translating the terms & conditions, documentation etc so that it confirms with the local laws.

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  3. Hey Ankur, if you search by micro-loans or micro-credit, you will find lot of information on it. It origination and implementation can be found in many Bangadeshi bank expecially Grameen Bank, whose founder Mohammed Younus, won a Nobel Prize for this.

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  4. i think there are sites like what u are planning where u can give loans to people on a person to person basis.

    The risk is greater so should be the returns, and secondly is this going to be serious , i doubt this will be for small time lending and borrowing, and what abt people who dont have collateral?

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  5. in the first phase it will be for lending between friends…. they know each other and can emotionally/otherwise pressurize each other into reducing the default rates….
    yes it is a big project… and i have big plans for it…. in the usa and uk there are a few sites namely zopa, prosper etc which are quite successful in the model… but i doubt if anybody in india has done it in a large scale.

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  6. nuclear familys and all
    but i back u the idea is great in city s and cuts the awkwardness angle

    the only factor to deal with is capital safety .. our legal system is pathetic

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