Peer to Peer Lending beats FD returns by 3X

Banks have dropped the interest rate across Fixed Deposit and Saving account post demonetisation. Demonetisation had lead to large inflows to Banks and now to Mutual Funds in forms or record breaking SIP sign-ups.

However, few banks have taken the Saving Interest rates up almost at par with Fixed Deposit. Example: Kotak Mahindra for customers who keep > 1 lakh you will be able to earn for the balance of money over 1 lakh a 6% rate.

This means that the 1st 1 lakh will only 4% interest rate and only beyond 1 lakh deposit you will get 6%. Thus if you kept 1 lakh only you will earn 4%.

However, I am here to advocate about Peer-to-Peer Lending (P2P Lending) as a new asset class for savers. P2P lending is now a regulated product from Reserve Bank of India (RBI).

To give you a balanced view, let me first put the risk involved.

The key risk the savers take in participating in P2P lending is the default risk from borrowers.

To minimise this you should choose the platform carefully. Here, are few tips:

Finally, here is a customer statement on P2P Lending platform www.monexo.co who invested Rs. 100,000 (Rupees One Lakh) a year back and has earned 23,000 Interest Income in a year.

With this yield of 23% you are not only beating returns of most of the other asset class you could double your money in less than 4 years.

Key Disclosures & Disclaimers: I am Founder of Monexo (www.monexo.co). P2P lending is a not a guaranteed product and each lender has a different experience as they make their own loan portfolio.