Study reveals UPI as the most preferred repayment mode on P2P lending

Feb 28, 2020

The financial city of Mumbai and the Silicon city Bengaluru topped the chart for the maximum number of lenders and borrowers respectively on P2P platforms.

Emergencies such as medical, rent, advance salary were lead reasons for borrowing on P2P platform, says a report released by LenDenClub, one of the leading peer-to-peer lending platforms in India. On the other, side new age technology Unified Payments Interface (UPI) with 50% users has topped the chart for loan repayment followed by 47% of ECS payment in P2P lending.

LenDenClub, the P2P platform that offers loans up to Rs. 10,000 has analyzed the annual data of more than 4,00,000 users and has come up with a report – ‘The 2019 Lending and Borrowing Behavior’. It gives out multiple data points and key insights showing the typical consumption patterns, borrowing and investment habits of people on P2P platform across India.

According to the report, the financial city of Mumbai and the Silicon city Bengaluru topped the chart for the maximum number of lenders and borrowers respectively on P2P platforms.

Education and needs like family functions, home renovations were the other key reasons to borrow after emergencies. The LenDenClub data clearly outlines the purpose of borrowing and lending among current society being need-oriented rather than an extravagance.

When it comes to borrowing and spending, Bengaluru is ahead in terms of people having the highest credit demand, Mumbai ranked second, followed by other metros such as Hyderabad, Pune, and Chennai. The highest numbers of lenders were from the financial capital of Mumbai, followed by the tech cities Bengaluru and Hyderabad.

The findings depict that young, tech-savvy, population with financial aptitude are much ahead of its previous generations, as 40% lenders and 53% of borrowers are under the age bracket of less than 30 yrs. The findings also reveal that the younger generation is more financially responsible and are comfortable borrowing and lending on new-age digital platforms.

The data also revealed that 12% of the borrowers and 16% of the lenders comprised of women customers, which suggests that salaried women’s loan borrowing market is under-penetrated compared to men. Customers from

business backgrounds topped the chart along with CXOs to mid-managerial level and salaried individuals as investors on the platform.

63% of the borrowers availed credit for emergencies, while 37% availed for aspirational needs. This is, in turn, suggested that emergencies were one of the main reasons for taking loans followed by aspirations such as family functions and home renovations.

The Customer analysis also has fascinating insights. Tuesdays, Wednesdays, and Thursdays were the preferred days by borrowers for the credit application. While the afternoon meal break, i.e. 12.00 noon to 1.00 pm was the most preferred time when the majority of the borrowers applied for a loan. The average percentage of repeat borrowers is 37% in which the loan frequency of repeat borrowers is three times.

Founder & CEO of LenDenClub, Bhavin Patel said, “There is no hiding of the fact that the usage of UPI in India is growing at a pace and has attracted the attention of the entire world. The same can be seen in our data where younger technology-savvy generations are using newer technologies such as UPI for doing transactions.”

“Considering only 16% of the lenders on our platform are women, we will work towards creating awareness and reducing the gender gap. Also, the data clearly reveals that the majority of loans are availed for emergency situations. This is the first of its kind data and will help investors to make informed decisions on borrowers through our platform.” added Patel.

Related post