Isepankur Launches International Peer To Peer Lending

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The Estonian p2p lending service Isepankur recently opened up to international lenders. Anyone with a bank account in the European Union or Switzerland can now start lending at Isepankur. Borrowing is still restricted to residents and businesses in Estonia (due to regulation reasons). I expected cross-border lending to be happening in peer to peer lending as early as 2008 (see my predictions). As it turned out it took 4 more years since my blog post for cross border lending to happen.

Isepankur is in operation since 2009 and has a good performance track record since.


Screenshot from the statistics section. The realised returns (after bad debt) show that most of those investors, who lent more than 5,000 Euro, fall into the range of 10 to 20% p.a.

Advantages and disadvantages for (international) lenders:

  • no lender fees
  • higher interest rate level in Estonia (compared to other European markets)
  • fast money transfer (SEPA bank transfers usually take only one working day and do not cost more than national transfers) – therefore getting money in and out is fast
  • lots of information about the borrowers (employment&income verification, information on other existing debts of borrower)
  • low bad debt in relation to interest rates
  • low minimum bid allows wide diversification
  • stringent debt recovery process
  • detailed statistics (>2 years track record) and account performance overview
  • high security standards
  • not that many loan listings. It takes lenders some time to built a large portfolio

Advantages and disadvantages for borrowers:

  • application can be completed totally online (no paperwork, borrowers even submit bank account records digitally)
  • moderate fees
  • fast funding with short auction duration; money accessible within two hours of auction (successfully) closing
  • currently the interest level is very high; this might get better if Isepankur succeeds in getting more lenders

I will publish an in depth review article showing step by step how I tested investing at Isepankur. Look out for this article containing screenshots showing the features and interface in the next days on this blog.

Win a Copy of Zidisha’s New E-Book

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Zidisha has just published the Kindle E-Book ‘Venture: A Collection of True Microfinance Stories‘. Authored by Zidisha staff and volunteers, the book is a rich and readable collection of real-life portraits of Zidisha entrepreneurs worldwide.
Venture is written for Zidisha supporters and anyone else who would like to better understand the realities faced by the poor and the aspiring middle class in the world’s least developed countries, the range of factors that affect their prospects for working their way out of poverty, and how microfinance can impact their lives. There are 34 stories of individual borrowers.

Zidisha founder Julia Kurnia told P2P-Banking.com that all proceeds will go to cover Zidisha’s operating costs.

Note to other p2p lending/p2p microfinance services: Do you have interesting inside stories to tell? Have you considered distributing them in e-book format? The marketing effect could be good compared to other marketing channels. For maximum exposure you might even offer the e-book for download free of charge. If you tried this method, tell us, so we can write about your experiences.

Here is how you can be one of 10 winners of a free copy of the new E-Book

Are you interested in Microfinance? Maybe you have used Zidisha already? Regardless of what triggered your interest in the subject, you have a good chance to win, because the only thing you have to do is: be quick!

The first 10 readers to leave a comment (any comment) under this blog post will win a free copy, courtesy of Zidisha. You need to leave your email address when commenting in the designated field. The email addresses will NOT be publicly visible. The email addresses of the 10 winners will be given to Zidisha. Zidisha will distribute the copies. And after you read it, please do come back and post a comment here how you liked it, so other readers can have some guidance on whether they should go ahead and purchase it. Thank you.

Student Loan Site Social Finance Receives $77M in Funding

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Social Finance arranges p2p student loans from alumni investors to graduate borrowers in the US. Currently students from 78 schools are eligable to apply for a Sofi loan in order to refinance their student loan debt. Social Finance says that it has generated more than 60 million US$ in loan applications and is on track to commit more than 200 million US$ in 2012.

Social Finance was founded only one year ago and now receives a staggering 77 million US$ series B funding from Baseline Ventures, Renren and DCM.

(Source: Techcrunch)

Kiva Enters India

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Today Kiva expanded its service to borrowers in India. India is the second most populous country and the largest democracy in Asia. India is an emerging economy (part of the aspiring fast growing so-called BRICS countries), but growth has slowed over the past years.

India is still country with large differences. Kiva states that ‘With more than 32% of India’s population falling below the international poverty line and 68% living on less than US$2 a day, the country is in dire need of responsible, affordable sources of capital. But India has a complex history with microfinance, leaving many financial institutions unable or unwilling to serve poor and socially-excluded borrowers. Recognizing this need and opportunity, Kiva wanted to give the global lending community a simple, ethical channel to support India’s most geographically-isolated, underserved and vulnerable groups. These groups include widows, the disabled, leprosy-affected families and many more who have had virtually no chance at making a sustainable living for themselves before now.‘

To start its p2p microfinance for India Kiva has partnered with 3 MFIs: People’s Forum, Mahashakti Foundation, and WSDS.

To comply with regulation in India loans will have a minimum term of 3 years and there will be no repayments to the lender during the 3 years. More details on Kiva’s country page.

P2P Lending in India – Interview with i-lend

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VVSSB Shankar, founder & director of i-lend, answers the questions of P2P-Banking.com.

What is i-lend about?

i-lend is an Internet based P2P lending platform in India which went live two months ago. Presently this service is available in Hyderabad, Andhra Pradesh. The portal connects the two sets of customers i.e. borrowers and investors who register online, undergo a verification process, list their requirements on the portal and agree for a mutually beneficial financial transaction.

Tell us about how your target customers traditionally seek loans?

Typically most of our borrowers have recourse to either personal loans from banks or resort to credit cards usage. These personal loans are available only to a selected segment working in some top 500 companies. Most people who are not a part of the above mentioned segment have to resort to private borrowings on which interest rates are very high more like 21 to 28%.  Moreover a vast majority of urban India who otherwise are gainfully employed are denied credit for various reasons. Personal loans are also very expensive in India attracting rates between 16% – 24% by banks.

Is there a reliable credit scoring model in India?

CIBIL – a credit rating institution was established a few years ago and today it is the de facto body which maintains credit scores. However the credit rating eco system is evolving.

What other challenges did i-lend face to introduce p2p lending in India?

Before establishing a P2P model in India, it was essential that we understand the complex regulatory environment. We had ensure that we were following various laws governing the banking sector, financial institutions and other state laws with respect the money transaction. With this information, we then worked on a viable business model for P2P lending in India.

We also had to modify the model such that both borrowers and investors found it attractive. For instance, i-lend does 100% physical verification of all details provided by the borrowers at both his residence and workplace reference. We also collect Post-dated cheques from borrowers for the loan tenure.

What are the three main advantages for lenders?

– Higher returns (at least 3 times more) on idle money compared to Saving Account – The return on savings account in India is 4% while i-lend offers a minimum returns of 12% on loans given to borrowers.

– Monthly returns on money invested through borrower EMI payment – While other investment options have a lock-in period, p2p loans will give investors monthly returns i.e. liquid cash

– A new investment option – where investors can decide whom they wish to invest in, their desired interest rate and spread their risk by investing in multiple borrowers – Min. investment amount is Rs.5,000.

What are the three main advantages for borrowers?

– Lower interest rates starting at 12%. Typical bank rates are anywhere between 17-19% and offered to select few

– No prepayment charges – Banks charge anywhere between 2-4% of the principal outstanding as pre-payment charges

– Flexible loan amounts – Rs.25,000 – Rs.300,000: Banks typically offer loans from Rs.100,00 only.

What interest rates do you expect to see on the marketplace?

We expect the interest rate to be anywhere between 14-16%. Continue reading →

Rainfin brings p2p lending to South Africa

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Today Rainfin launched the first p2p lending service in South Africa, which to my knowledge is the first national p2p lending service operating in an African country. Based on a sophisticated technology founders Sean Emery and Hannes van der Merwe launched the service after more than a year of implementation. Borrowers can apply for loan amounts between 1,000 and 75,000 ZAR (approx. 125 to 9,250 US$). Rainfin expects to reject as much as 80% of the applications. Rainfin charges 3% in transaction fees (2% to borrowers plus 1% to lenders). Rainfin uses an auction systems with the borrower setting the maximum interest rate he is willing to pay. Current listing are for nominal interest of about 15%. Continue reading →