Chinese investors find Indian P2P lending platforms attractive

Though the Chinese Peer to Peer Lending (P2P) Industry is one of the largest lending markets globally, its investors are finding the Indian P2P industry attractive. This is because the Chinese P2P platforms are finding regulatory hurdles in China. In April 2018, the Chinese authorities had imposed a new ‘record filling’ system to do away with the non-serious players from the industry. 

In the recent past, more than 6,000 P2P lending platforms were recorded in China, out of which, only 1883 platforms were able to continue operation by the end of March this year. Due to these changes in the Chinese regulatory norms and their economic clampdown, many Chinese investors, realising the growth trajectory in the Indian economy, are looking towards investing in lending industry in India.

Experts such as Raghavendra Pratap Singh, the co-founder of i2iFunding, a P2P platform headquartered in Noida, feels that with the Reserve Bank of India (RBI) coming up with norms to regulate the Indian P2P lending industry, it is poised to grow significantly in next 5-10 years and will accommodate the financial requirement of lakhs of firms and individuals. 

“Investments from Chinese investors have the potential of giving the sector a major boost. Dedicated P2P industry players are expecting a huge economic upswing from the forthcoming Chinese investments. Instead of just pouring in investments, most of the Chinese investors are also seeking partnership opportunities with Indian P2P lending platforms, as the Indian ecosystem offers better and clear growth opportunities with early intervention by the Indian regulator. At i2iFunding, we have already had meetings with five Chinese companies out of which three are already running successful P2P lending companies in China. Three of those companies have visited our office and one is expected to visit us in the coming week,” Singh told THE WEEK. 

He further says that the Chinese investors are mainly striving to partner or invest in the companies that have received RBI licences and are waiting for the platforms to get P2P-NBFC license from RBI. Until then, they intend to understand the nuances and complexities of the industry before they step into the field. 

“Chinese investors now do not have any other viable option through which they could get their presence felt in the Indian industry. Therefore, they are setting up their offices in Mumbai and meeting many players from Mumbai, Delhi, Bangalore and Chennai, to be able to get a better understanding and a deeper perspective of the Indian P2P lending industry and investment structure,” added Singh. 

He says that comparing to the Chinese P2P lending market, which is mature and worth more than $ 450 billion, India’s P2P lending industry is just beginning to bloom and is expected to receive benefits by partnering with Chinese companies. “As of now, there should not be any regulatory hindrances, given that the latest FDI rules permit foreign investment up to 100 per cent under the automatic route in 'Other Financial Services,'” said Singh.