Hong Kong-based Monexo Innovations, the latest entrant in the Indian peer-to-peer lending space, plans to raise about $5-10 million to scale up its business.
Peer to peer lending platforms refer to a business model that brings together lenders and borrowers – individual and institutional -with funds changing hands after proper due diligence related to Know Your Customer (KYC) and Anti Money Laundering (AML) procedures. Incidentally, factoring in the growing popularity of the segment, the Reserve Bank of India (RBI) released a discussion paper in April on the proposed guidelines for the participants.
“Currently, we have not raised any funds externally but we will need to raise in the range of $5-10 million to scale our operations,” Monexo Founder and Chief Executive Officer Mukesh Bubna told The Hindu , adding that he is talking to some global venture capital players.Interest rates
Currently, Monexo, which unveiled operations last month, has a few hundred lenders registered on its platform where borrowers can avail loans at interest rates in the range of 13 per cent and 30 per cent, depending on various parameters.
According to Mr. Bubna, the company used “data and science with as many as 600 data points” to evaluate the credit worthiness of the borrower. It rates them in the band of M1 and M8, with M1 being the highest rating. Simply put, a lower rating would mean a higher interest rate for the borrower.
While the company charges a fee of 2.5 per cent of the loan amount from the borrower, it takes a similar cut from the lender as well but only when the loan is repaid. It has tied up with the third-party entities to follow up on the recovery if the borrower defaults on the payments.