Investment

Why are NRI’s opting for P2P investments in India?

By  | 

Investment products in India have established their goodwill with its citizens for its profit-driven and simplistic nature. These reasons have further influenced Non-resident Indians to create wealth in the Indian investment market while improving the economy of their home country. According to an Economic Times report, India retained its position in 2018 by receiving the highest amount in remittance at USD 79 billion. 

Remittance has been largely fueled by the introduction of unique investment options such as peer-to-peer lending and borrowing in India. Similarly, for NRIs who are looking to gain higher returns on their investments, P2P platforms are providing options that minimize the risk of loss and market-linked volatility. 

Primary concerns with other investment options

Prior to the introduction of P2P investing platforms, most NRIs invested in Fixed Deposits or Equities and had to bear the various accompanying complexities. While Equity investments provide higher returns when compared to Fixed Deposits, the absence of control over the investment outcome can result in losses that exceed expectations. 

Furthermore, the fixed trading time of the Indian stock market brings inflexibility to NRIs who have to wrestle with the time difference to constantly monitor their investments. They have to deal with fund managers who are available at their specific time and lose a portion of their profits in commissions and fees. It is through P2P investments in India that NRIs found the ideal investment option to earn higher returns while avoiding such related issues. 

Why the increase in P2P investments by NRIs in India?

The growing popularity of P2P lending in India among NRIs is a result of the simplicity of its digital framework. As investors, they can earn profits on the interest by lending the invested amount to borrowers by connecting with them directly without the interference of a third party and its subsequent costs. The following features of P2P investments have contributed towards becoming the NRIs new favourites: 

  • Total Control: P2P investing platforms provide total control over investments as there are only two parties involved: the investor and the borrower. By creating a profile as to which borrowers they want to lend their money, investors don’t have to deal with fund managers (the middlemen) and lose their profits over commissions and fees. 
  • Flexibility: Being a fully automated and technologically-backed digital investment platform, an NRI can manage or monitor the investments at any time of the day. With features like auto-investment, they have the flexibility to invest a lump sum amount, irrespective of the time-zone. 
  • Minimal risk: Unlike equities, P2P investments in India are not market-linked and provides a volatility-free investment option with guaranteed monthly returns. As the credibility of borrowers is ensured based on numerous data points, there is minimal chance of default. 

New-age innovations such as P2P investments are transforming the way in which NRIs used to invest in India. Furthermore, P2P investing platforms are also assisting NRIs to help Indian underbanked individuals without a credit score to avail instant loans. One such example of a P2P investment platform in India is RupeeCircle. 

NRIs can invest a lump sum amount through the RupeeCircle platform which is then lent to the underbanked individuals through RupeeCircle’s algorithm which leverages 5000+ data points for accurate borrower profiling. For NRIs, P2P platforms such as RupeeCircle are being increasingly opted over other investment options as they provide NRIs with an attractive and safer option to start earning profits within a shorter time frame. The compounding effect on their investments allows them to re-invest their profits to create wealth over time while gaining the satisfaction of helping the underbanked individuals. 

Ref: https://economictimes.indiatimes.com/nri/forex-and-remittance/with-78-billion-india-still-highest-overseas-remittance-receiver/articleshow/72271170.cms

This article is authored by Nikhil Prabhakar, Head of Marketing & Products at RupeeCircle. He is an alumnus of IIM Ahmedabad & ESCP Paris and has 10+ years of work experience across multiple industries like Fintech, IT & Energy. He is an active investor across equity, derivatives, debt and real estate.

Leave a Reply

Your email address will not be published. Required fields are marked *