7 Reasons Why Indians Are Adopting To Peer-To-Peer (P2P) Investments Faster
Traditionally, majority of Indians have always stood out as the “great savers”. As per one of leading ratings firm India Ratings, household savings rate stands above 30% which is much higher as compared to many other emerging & developed economies.
Interestingly, nearly 75% of these savings are invested into residential or any other real estate property and some of the remaining in gold or bank deposits. Less than 3% Indians invest in equity market with direct investment or mutual funds.
However off-late, with the emergence of Peer to Peer (P2P) finance since 2015, Indians have found a new asset class overcoming multiple obstacles and fitting in with the investments behaviour of the masses. Here are 7 reasons why Indians are aggressively adopting P2P as an alternative investment class –
1) Overcoming the fear of losing money – With P2P platforms offering low investments & high returns coupled with monthly payments in the investor account, this asset class is slowly overcoming the biggest emotional hurdle of most conservative Indians. For e.g. with RupeeCircle P2P platform, one can invest as low as Rs 5000 with minimal service fees to start generating monthly returns.
2) Low or Zero registration fees – With favourable regulations, investors can complete the registration process online in a few minutes and start investing from the anywhere and at any-time.
3) Minimum Documentation – With Reserve Bank of India guidelines for P2P finance declared in FY 2017-18, investors need to provide only KYC documents (PAN card, Aadhaar Card & Address Verification documents) to proceed with the investments.
4) Clear tax rules – The profit from P2P finance is simply treated as short term income from investments as taxed as per the existing Income Tax rules.
5) Mobile friendly investment process – Investors are able to easily monitor their transactions & manage their portfolio using simple to use mobile apps or desktop interfaces.
6) Investment choices – Most P2P platform allow the investors to choose from multiple borrower profiles while funding full or partial requirement. For e.g. RupeeCircle offers a machine learning based classification of borrowers from A-F risk grades and a choice to fund as low as INR 5000 for a particular borrower.
7) Lesser efforts & time requirements – Compared to equity markets, real estate & gold, P2P investments have minimum impact as far as global sentiments, financial crisis or industry problems are concerned. The investors don’t need to conduct in-depth research or study financial statements in order to make a decision. The common sense skill and lending experience is sufficient to give an edge for these investments.