According to a report in EconomicTimes, start-ups in the P2P lending industry are trying to use the blockchain technology to ensure transparency, bring legitimacy and improve efficiency in the sector. They want to develop a shared ledger system based on the blockchain technology.
The industry is currently facing a cycle of evolution as major firms like Faircent and novice companies like PaisaDukan, Indiamoney Mart and OMLP2P are backing the plan of a shared ledger. They are focused on bringing up a system that shares data about lending transactions to eliminate frauds. These companies are waiting to get approval from the Reserve Bank of India for the NBFC P2P.
Founders hopeful for a big run
Founder of Faircent, Rajat Gandhi, said, “We are building a multi-tenant infrastructure using blockchain which will be used to implement the business rules like credit assessment and bring in models using smart contracts. Further, this will also help us scale up our services globally and bring in more credibility since all transactions will be immutable.”
Rajat’s firm can invest more than $1 million for developing the highly profitable blockchain based system. BigWin Infortech’s founder Rajive Ranjan said, “Our main aim is to ensure that a consumer does not take loans from multiple platforms and ends up defaulting across causing serious trouble for the nascent sector.”
Although firms are joining hands to use the latest technology yet, they want to play safe. Rajat Gupta, Founder IndiamoneyMart is positive of attracting more prominent firms in their group. He believes the inclusion of more companies will increase system’s efficiency.
Experts weigh-in the move
As per market experts, P2P platforms have a hard time managing each loan they lend. Unlike conventional lending systems, P2P clients can have numerous lenders. A contract has to be empowered among the parties to declare the trade valid.
According to Surrendra Jalan, Founder OMLP2P blockchain technology will ease the process of evaluating customer data. They will also be able to secure the data from hacking which will ensure greater reliability among the participants of a trade.
Apart from the above firms, some players have not shown a keen interest in blockchain’s usability in the P2P industry. Founder of iLend, Shankar Vaddadi said, “Players like us coming on a blockchain platform makes sense only when the government also starts getting all its records and documents on a similar platform, only then can we have a fool-proof system.”
As per an article in techstartups.com Fintrux Network, a blockchain based lending system was able to generate $25 million by ICO. They have been trying to create an ecosystem that connects lenders, borrowers and service agencies. The system will be used specially to fund start-ups and small businesses. The network is powered by Ethereum to ease the P2P loan generating process for the smaller firms.
Firms in India are likely following up with international companies from US and China. It seems to be the right time to undertake a change and match steps with the new world. But, in the absence of government guidelines about the use of blockchain the P2P industry is at a competitive disadvantage with traditional lenders.