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Peer-to-peer lending platform awaits BOT nod


VORAPOL PHORNVANICH, chief executive of PeerPower, a financial-technology start-up, aims to create a new online peer-to-peer lending platform for investors and borrowers.

One of the 10 fintech teams chosen by the Securities and Exchange Commission in a recent competition, PeerPower is awaiting regulatory approval to launch a new consumer-loan business model.
“PeerPower is an online marketplace that allows investors to lend money directly to customers without having to go through an intermediary,” Vorapol said.
“At present, investors and savers in Thailand earn a relatively low return on their funds, averaging 0.5 per cent for savings accounts, 2-2.5 per cent for fixed deposits and 4-4.5 per cent for corporate bonds.
“On the other hand, if you are a borrower, you have to pay a relatively high interest rate on consumer loans, which have no collateral. Interest rates are currently as high as 15-36 per cent per annum. The interest-rate spread is huge, so we think this new online platform can help narrow the gap between deposit and lending rates as happens in other countries.
“Our platform starts with the customers, so you can register to borrow a consumer loan by providing personal financial data to allow our system to score your creditworthiness.
“We check with the National Credit Bureau on your financial record and input your income, salary and other data into the system to come up with a credit score. If your credit is A grade, then the interest rate will be relatively low, and if you have a lower grade, the rate will be higher.
“Then our system will put your loan application on the platform so that potential lenders can make a decision. In fact, there are usually several lenders in a single peer-to-peer loan or many lenders to one borrower.
“Suppose you’re applying for a Bt200,000 loan. There could be as many as 20 lenders, each of whom lends Bt5,000 or Bt10,000 or more. This feature helps reduce lenders’ risk.
“PeerPower is in the process of getting a licence from the Bank of Thailand. We will start with personal consumer loans that have no collateral. The minimum loan is Bt50,000 and the maximum is Bt1 million per application or five times your monthly salary.
“The system takes about 48 hours to process your loan application, after which it will be on the online marketplace and those interested in lending may express their intention to provide the funds.
“Once the fund mobilisation is 100 per cent complete, the system will transfer the money into your bank account.
“According to tentative regulations, individual lenders may lend up to Bt500,000 per person per year. However, if you have proof you’re a high-net-worth person with more than Bt50 million in wealth or annual salary of Bt4 million, you may lend more money to the P2P platform. Institutional investors can also lend money to the platform.
“The Bank of Thailand’s regulations on peer-to-peer lending is expected to be effective this quarter, so we plan to start the business in the second quarter.
“The overall demand for consumer loans that have no collateral, including credit-card and other personal loans, is estimated to be about Bt660 billion. Peer-to-peer lending may get a market share of 2-8 per cent based on figures from other countries that have already introduced this [kind of] online lending service.
“The Thai market should be worth more than Bt10 billion and interest rates are likely to be cheaper than existing rates from banks and other financial institutions, depending on your credit scores.”

Published : January 27, 2017

By : NOPHAKHUN LIMSAMARNPHUN THE NATION