Tiger Global-backed micro-savings platform Jar is set to enter the peer-to-peer (P2P) lending business, ‘Jar Plus’, in partnership with the non-banking financial company (NBFC) LenDenClub.
“Jar Plus is in the testing phase and is being rolled out to a handful of customers within the Jar platform. The firm is mostly receiving feedback and implementing it right now. Rollout will take some more time,” A source aware of the developments told Moneycontrol.
P2P lending is a system connecting borrowers and lenders directly. Platforms like Jar will help NBFCs in sourcing customers and the NBFCs will evaluate the borrowers and obtain prior consent from the lenders to disburse the amount as a loan. This is considered a high-return alternate investment mechanism.
“There is a massive opportunity for this segment. If a player abides by all the RBI regulations, it can help lenders earn high returns on the money they decide to lend,” the person quoted above said.
Also Read: All you need to know about peer-to-peer lending platforms
Rising competition
In 2021, Fintech platform CRED said launched its P2P lending product called Mint for its members. CRED Mint was launched in partnership with Liquiloans, an RBI-registered P2P NBFC.
Similarly, In 2022, announced the launch of an investment platform for its merchant partners.
BharatPe’s P2P investment product is powered through RBI-regulated NBFCs- LenDenClub and Liquiloans. BharatPe was also working on providing its merchants an option to invest in Fixed Deposits by Unity Small Finance Bank.
Buy-now-pay-later (BNPL) startup Uni Cards in 2023 acquired OHMY Technologies (OMLP2P), a peer-to-peer lending platform that is licensed by the Reserve Bank of India (RBI) to operate as an NBFC-P2P platform.
RBI is tightening regulations on this segment
After digital lending, P2P lending has come on the RBI’s radar as some platforms were observed to be working outside the preview of the guidelines, including flaws in the KYC process.
Also Read: Exclusive: RBI said to Up Scrutiny of P2P Lenders, asks platforms to Share Financial Data
The regulator has engaged with all licensed platforms via email, besides conducting supervisory visits at their offices in New Delhi and Mumbai since September. Post-reviews, corrective measures were handed out to individual firms, which continue to engage with the RBI.
Jar's lending partner, LenDenClub also counts players like PostPe, Google Pay, Capital Trust and KarmaLife as its P2P partner.
The Jar app was founded in 2021 by Nishchay AG and Misbah Ashraf, and is built on the idea of helping Indians make investing a habit.
In February of 2022, the startup bagged $32 million in Series A funding led by US investment firm Tiger Global. The Jar app, which can look at the transaction history, rounds up an individual’s daily spending and puts some money aside as an investment.
Jar has been diversifying its revenue through different products. The firm recently joined the digital lending frenzy as the Bengaluru-based digital gold savings platform looks to accelerate its monetisation efforts after generating just about Rs 8.7 crores in operating revenue in its first full fiscal year FY23, the firm reported a net loss of Rs 122 crores.
Also Read: Tiger Global-backed savings startup Jar to foray into the digital lending business
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