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India’s Growing Social Lending Trend

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By Author: DANA JOSE
Total Articles: 2
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Fast paced, and impatient are the words used to describe India’s millennial population. Just like in most parts of the world, these individuals born between 1980 and 2000 are ardent users of technology, who are accustomed to taking on hefty tasks using their smartphones. They can manage a household and run a start-up at the touch of their fingertips. Despite the tremendous amount of money flowing in and out of their bank accounts, which when compared to their parents’ generation is astounding; the group does share a compassionate and empathetic view towards life. What’s interesting though is that these individuals are no longer interested in saving up for the future but engrossed in investing heavily for present circumstances. They splurge on vacations and homes but don’t spend too much time thinking about life after. Contrary to the generation before them, they aren’t fans of investing in precious metals or fixed deposits because the returns do not satisfy. In recent years, Peer to Peer banking platforms in India have largely witnessed lenders who are under the age of 30.

So why exactly is the sector important to a millennial?

For a millennial, the choice of investing on a well-established P2P platform as opposed to other financial institutions is based on several factors.. Firstly the demand on P2P lending platforms is huge and the future of the sector looks bright. Also, research has shown that the market is expected to grow to $5 billion by 2023 which makes it a force to reckon with. In addition, the digital inclination that the millennial and Gen X populations have makes P2P lending an easier and more convenient option for investing.

Secondly, most of the young lenders also come from money-lending families who over the years have continuously been loaning money to other needy individuals. P2P lending platforms are more established and reliable platforms that allow them to continue to do so in a more systematized manner.

Next, P2P lending platforms in India are now being recognized as NBFCs (Non-Banking Financial Companies) because of the RBI regulations that are in place. The guidelines will be able to monitor P2P lending platforms closely and hence revolutionize the sector into a more transparent and highly credible investing platform. For the young Indian population, this is important as trust is vital when lending out money.

Empathy is more than just an emotion and most of the millennial generation does empathize. It obviously is not simple to arouse this emotion especially with a population that spends most of their time working on profit building projects and huge revenues. They want the real stories of real people told on the platforms that they spend most of their time on in order to truly empathize. Again, they want to make meaningful impact wherever they go and this means supporting movements that they believe in and not what their parents believe in. This means that capitalizing simply for financial returns makes no sense to them. They want to empower entrepreneurs, support farmers and educate girls.

Furthermore, anything that is simple, available as a mobile application and online is millennial friendly. The generation has no time to spare and neither are they going to visit banks and brokers to invest in money. They multi-task using applications and authorize only digital transactions to fulfill any financial task. For this reason P2P lending platforms that leverage technology are attractive for a young investor who’s looking towards making a meaningful investment.

According to Maslow’s hierarchy of needs, a millennial that is moving up the pyramid and has reached the point where all of his/her needs have been met would now look forward to self-actualization and insist on seeking fulfillment in finding the true meaning of his or her life. P2P lending has thus established itself as a platform for such individuals looking to promote social good as part of their journey in life.

Where can a millennial invest in money online in India?

India is set to become the world’s youngest nation by 2022 with an average age of 29. The economy of the country has also surpassed that of China as the world’s fastest growing economy according to a report by the IMF. This comes as no surprise given the country has welcomed economic change and has been at the frontier of tech advancements. Thus there exist multiple P2P platforms in India competing on the same ground.

The key would be to invest in vintage platforms such as Rang De. These are organizations that have a solid foothold in the social investing sector and are transparent. It would also be advisable because Rang De is also transitioning into a NBFC P2P as licensed by RBI meaning that credibility is not a question. They are due to launch their new platform rangde.in.
Word from the wise would be to seek not just the financial rewards but the emotional rewards too. At Rang De, borrower stories are real and the organization does not just lend out money after arousing pity among lenders. Instead Rang De chooses to give social investors the opportunity to empower and empathize with real human stories by seeing the impact they make first hand.

Finally, to change a life takes great effort but more importantly it means changing the lens with which life is looked at. A millennial is essentially India’s future and the change maker of tomorrow.

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