12% Club App Enters the P2P Lending Space

 12% Club is an investment and loan app powered by the BharatPe, a FinTech startup. BharatPe is India's one of the biggest Fintech company. You can make up to 12% interest on your money if you invest it at 12%.

Merchant payments and financial services provider, 12% Club, is bolstering its consumer play, foraying into the peer-to-peer (P2P) 12 club p2p lending space with the launch of its product – 12% Club BharatPe

BharatPe’s P2P offering will allow individual investors to invest and borrow at 12% interest through the ‘12% Club’ app.

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12% Club  has collaborated with LenDenClub for the consumer offering and is currently onboarding Liquiloans. The fintech had introduced peer-to-peer lending for its merchants in 2019 with the same partners.

To ensure low delinquencies, P2P investors on the 12% Club platform will be lending to its merchants.

The company will be able to better assess these loans based on business cash flows and assist in repaying this credit by even deducting a small amount from daily payouts because these merchants use the 12% Club payment system, the company claimed.

The borrowing on ‘12% Club’ will be fueled by a standard non-banking finance companies (NBFC) such as Hindon Mercantile to give loans to consumers.

12% Club had first launched

“We did a soft-launch for the product earlier this month and think of ‘12% Club bharatPe’ as a good alternative to park extra liquidity, without taking the high risks of equity. Further, it allows investors to withdraw from the offering at any time. Since 12% Club  has millions of merchants, there is no concentration risk to lending to a small cohort,”

Grover predicts that the platform's typical loan term will be between three and twelve months.12% Club is already witnessing a monthly investment run rate of $5 million by individual investors, and loan disbursals worth $1 million.

The software is receiving close to 2500 daily downloads, according to the business, even though most of the growth has come through recommendations. 12% Club  had first launched its P2P lending offering to employees earlier this year (12% Club bharatPe)

12% Club recently entered India’s coveted unicorn league at a valuation of $2.85 billion, after it raised $370 million in a primary and secondary mix, as a part of a Series E funding round led by new investor New York-based Tiger Global Management.

What is P2P lending?

• 12 club p2p lending is not a new feature.
• In 2017, the Reserve Bank of India had brought this service under its regulatory purview.
• Even at the time, there were more than 20 12 P2P lending players in the market but RBI’s regulations ensured only the serious ones with watertight business models remained in the sector.
• In 12 club p2p lending, users sitting on idle money provide loans to potential borrowers identified by the service provider.
• These lenders then receive payments from the borrowers on a set basis — either one time, or in equated monthly instalments.
• After RBI issued its regulations in 2017, the space saw a spree of fundraising
• Involving some of the existing players in the segment.
• Some of the major companies operating in this space include RupeeCircle, Finzy, IndiaMoneyMart, etc.

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What are the risks?

• One of the biggest risks associated with this kind of lending is the non-repayment of loans.
• Given that 12 club p2p lending is a form of unsecured loan, there is no guarantee put up by the borrower for the lender to redeem in case of a default.
• However, the unsecured nature of the loan is also the reason behind the high return on investment.

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About BharatPe “12% Club”?

• “Consumers on the 12 Percent Club BharatPe app can invest their savings anytime by choosing to lend money through 12% Club BharatPe partner 12 club p2p
• Additionally, consumers can avail collateral-free loans of up to Rs. 10 lakh on the 12 % Club for a tenure of 3 months, as per their convenience,” the statement said.
• 12% Club BharatPesaid there will be no processing charges or pre-payment charges on the consumer loans,
• A number of factors would be used to determine loan eligibility, it was also added.
• Including consumer’s credit score, the shopping history using Payback loyalty system or the payments done via 12 Percent Club BharatPe
• Consumers investing via the app can put in a request to withdraw their investment anytime, partially
• Or completely, without any withdrawal charges.
• They can start by investing Rs.1,000 and the upper limit for investment by an individual is currently set at Rs. 10 lakh.
• The company said this would be increased to Rs. 50 lakh over the next few months.

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Conclusion

The rolling out of 12 club P2P lending by 12 Percent Club BharatPe marks fintechs trying to roll out newer features to keep captive audiences within the ecosystem, allowing them to earn and borrow at competitive market rates.