Faircent Case Study
Faircent.com has the largest share in the Indian P2P lending platform market.
By September 21, 2020, its average annual interest rate had reached 25.28%,
with a current lending amount of Rs 1.492 billion (approx. USD 20.23 million).
This platform announced in January 2020 that its revenue had increased by
50 times in the last 12 months, with the monthly loan amount climbing from
Rs 250 million to Rs 1.2 billion. It also aimed at a monthly loan amount of Rs
7-8 billion in the next year. Based on its estimates, the Indian P2P market size
will rise up to Rs 30-40 billion in the coming two years.
Faircent.com launched Anti-Lockdown Loans during the COVID-19 outbreak
for lockdown-affected borrowers in low-risk areas, allowing repayments at
reasonable rates after a 3-month EMI free period.
Below are the loss rates and net return rates of its products at five risk levels
from April to September 2020:
Minimal Risk: loss rate 0%; net return rate 12.9%;
Low Risk: loss rate 0%; net return rate 17.2%;
Medium Risk: loss rate 0.5%; net return rate 19.9%;
High Risk: loss rate 5%; net return rate 18.7%;
Very High Risk: loss rate 10%; net return rate 18.6%.
The loss rate is the percentage of borrowers who have more than six unpaid
EMIs, and the net return is the difference between the percentage of interest
income from investment and the potential loss on default.
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