Mumbai-based online peer-to-peer (P2P) lending startup RupeeCircle will receive Rs 4 crore (around $588,000) in seed funding from Mahindra Finance, which is a non-banking financial company (NBFC) under Mahindra Group. With this investment, Mahindra Finance will pick up 13% shareholding in the startup, according to the regulatory filings, reported VCCircle.
Founded in 2016 by Ajit Kumar, Abhishek Gandhi, Ashish Mehta and Piyush Saurabh, RupeeCircle (formerly Bank2Grow) is a new P2P lending company that aims to move the shift to a bank-less world by connecting people who need a loan with people who have money to lend.
RupeeCircle has also applied for a P2P licence from the Reserve Bank of India, Ajit Kumar, co-founder and chief executive of RupeeCircle, said in a statement.
The startup has an in-house underwriting team which does the credit analysis of each of the borrowers. RupeeCircle has also developed a proprietary Credit Score Model which incorporates a number of parameters such as credit history, financial and other behavioural patterns of the borrower.
RBI had issued norms for P2O startups in the country last year in October. According to the norms, such firms will come under the non-banking finance companies. These firms need to obtain an NBFC-P2P license to operate and have a net fund worth not less than ₹2 crores or as specified by the RBI, and they can only operate as intermediaries between the lenders and the borrowers.
About Mahindra Finance, in July 2017, it had also invested Rs 10 crore in an another NBFC Aye Finance by purchasing part of its portfolio, under a securitization deal. Last month, Aye Finance has raised $21.5M in a funding led by Google’s CapitalG.
As per the Reserve Bank of India, Peer to Peer Lending (aka P2P Lending) is a form of crowd-funding used to raise loans which are paid back with interest. Currently, Indian P2P has more than 30 players, and the market size is slated to cross US$4-5 billion by 2023. The VC activity in the sector is also high with around USD 221 Mn flowing in the last two years. Naturally, RBI issued final guidelines in Oct’17 for P2P Lending in order to better regulated and also make it trustworthy.
In last couple of years, startups in P2P lending sector are consistently raising funds. Few startup in P2P lending segment include Delhi-based Faircent, Delhi-based Peerlend.in, Mumbai-based Finzy, Bengaluru-based Cashkumar, Monexo Fintech, BigWin Infotech, along with OML Technologies, among many others.
In March, US-based digital payment company Wibmo Inc acquired Gurgaon-based mobile peer-to-peer (P2P) payment solution startup Mypoolin in a cash and stock deal valued above $1 million.
Prior to this, Faircent, touted as India’s largest P2P lending company, raised Rs. 25 crore in a high-profile funding round led by Incofin Investment Management with participation from its existing investors.