Millennials, medical emergencies drive P2P lending

The Covid-19 has separated the society in two – those who lost their jobs and are struggling to make ends meet, and others with pandemic-induced inactivity having surplus money. Former is forced to borrow money, while the latter is looking for attractive investment opportunities. Interestingly, there are peer-to-peer (P2P) lending platforms which are connecting them both. One such platform is Lendenclub, whose latest study says millennials are the most influential cohort as both borrowers and lenders on P2P lending platforms.

“Millennials belonging to the age group of 21-30 years were the most active as both borrowers (56%) and lenders (54%) on its platform. This was followed by the cohort belonging to the age group of 31-40 years accounting for 37% in case of borrowers and 33% in case of lenders,” the report said.

Bengaluru tops list

The credit demand originated the most from Bengaluru, and the highest number of lenders too hailed from the tech city. Other major lending and borrowing markets were Mumbai, Hyderabad, Pune and Chennai, showing a clear dominance of west and south.

“Covid-19 has accelerated digital penetration and uptake across every industry, and the lending sector too, has seen transformation beyond imagination. Interestingly, millennials also actively participated as investors availing P2P lending as an aspirational asset class offering lucrative returns. Thanks to e-commerce and penetration of new-age technology which has built an all-new tech empowered segment of Indians across tier-II and tier-III cities from where we witnessed fresh bouts of demand,” said Bhavin Patel, co-founder and CEO, LenDenClub.

Medical emergencies prime reason

Not surprisingly, medical emergencies accounted for 35% of digital loans that were availed during the year.

“As two consecutive waves of the Covid-19 pandemic took a toll on the Indian healthcare system, there was a huge spurt in medical emergencies reported through the year,” the report said. The other reasons for loans included ‘advance salary’ accounting for 33% and ‘family functions’ accounting for 10% of loans.

Salaried professionals ranging from CXOs to mid-managerial level, topped the chart as investors on the platform with Rs 1.81 lakh being the average investment amount on the platform.

“Owing to the festival season, November (2020) and December (2020) and February (2021) were the top three months when demand for credit was the highest. Whereas, during April-Jun 2020, the demand for credit was the least,” the report noted.

The data also revealed that males continued to dominate the platform with more than 80% participation.

The study took into account annual data of 4 lakh users to analyse key trends in the P2P lending industry.