When you put money in a bank, you get an average return between 4-8% on your deposits and when the banks lend money it lends anything between 18-36%! In the entire process, the bank is aggregating money from borrowers and then lending it out.
Now, imagine this: what if it was possible for credit worthy borrower and lender to directly from each other? They both can agree at somewhere between 12-15% interest rate – i.e. the lender gets a higher return and borrower gets the money at a lower rate.
Faircent.com is a P2P lending marketplace where lenders and borrowers aggregate to lend and borrower through a dynamic price discovery mechanism.
In short, Faircent is dis-intermediating the banks. The Gurgaon based startup allows individual credit worthy borrowers to directly connect with individual lenders and remove banks from the process thereby saving on the spread banks enjoy while borrowing from depositors and lending to borrowers.
One of the interesting aspect about Faircent is its founding team – CEO Rajat Gandhi (was part of founding team of Indiatimes and helped create brands like SimplyMarry/Ad2Book etc), COO Vinay Mathews (Country Head – Sales & Service Delivery with Timesjobs) and Nitin Gupta, who is non-executive cofounder (ex-president of Rediff.com, Country Manager and CEO for MasterCard (South Asia)).
Withn 3 months of operations, Faircent has grabbed over 100 Lenders and 200 borrowers; and has disbursed over Rs. 20 lacs of loans.
Here is a short qna with CEO & Cofounder, Rajat Gandhi:
How did you guys come together?
Vinay and I have been colleagues and friends for more than 10 years. We became friends coz we could work together. We understand online exchanges having built several of them, building an exchange to disrupt largest industry was extremely tempting and we decided to take the leap. Since we both are from Internet Industry, we needed someone who had an experience in the financial sector and with regulators. Nitin was Vinay’s boss during his Rediff days, we reached out to him for guidance, he too got excited like us with the concept and opportunity; it just took us a day to ink the partnership.
Faircent’s typical target segment?
We are targeting urban internet savvy consumer. Lenders are financially savvy who prefer to invest in instruments which require intellect like stocks and shares they are in the age bracket of 30-45, with income of over Rs. 10 Lacs. On the other hand for borrowers our core audience is 25+ working in top companies having annual income of over Rs. 6 Lacs. Residing in Delhi NCR.
How do you do due diligence (on whom to give loans/allow participation in the platform)?
We have a technology enabled automated robust underwriting process. The credit score is of every borrower is checked thereafter Faircent undertakes physical and document verification. Our underwriters give their recommendations so that it becomes easy for lenders to take decision.
Our growth plans are two pronged (a) to expand the product range (b) geographic expansion
(a) Product expansion : Besides personal loan we are in the process of launching business loans, later in the year we would launch education loans, thereafter secured loans like car finance and home loan.
(b) Geographic expansion: By the end of this financial year we plan to be present in Mumbai, Chandigarh, Bangalore, Jaipur, Ahmedabad, Chennai and Hyderabad. We plan to have our own offices and appointing franchises.