Millennials And Gen Z Are Powering India’s P2P Lending Boom, Check Latest Findings

Peer-to-peer (P2P) lending in India is growing, and the torchbearers of this shift are Millenials and Gen Z. This digitally savvy young group is not just adopting the concept - they are lending it. According to a recent report by LenDenClub, a P2P lending platform, over 61 per cent of P2P lenders are under the age group of 40. The largest chunk, 36 per cent, belongs to the 26-35 age group with the 36-45 group following at 25 per cent. This shows a generational shift in the lending behaviour of Indians.

P2P lending offers a promise of high returns, the report notes that more than 60 per cent of lenders have earned over 20 per cent on their investments. However, it is not all rosy.

The report shows that a quarter of its lenders reported returns of only up to 10 per cent while 14 per cent of lenders experienced partial losses on their principal, a stark reminder that while P2P lending could be lucrative, it carries inherent risks.

Interestingly, P2P lending is not a boys-only club. While men dominate with 72 per cent of the total lending volume, women are also making their presence felt with a 21 per cent share. This growing participation of women shows how the P2P lending space is gradually becoming more inclusive.

Geographical Pulse of P2P Lending

When it comes to lending volume and user participation, Maharashtra and Karnataka are the undisputed leaders, contributing 23 per cent and 20 per cent, respectively to the total lending amounts. They also account for the highest number of users, with Maharashtra alone claiming 40 per cent of the lender base. What is fascinating, though, is the rise of states like Chhattisgarh and Bihar in the P2P lending ecosystem,

These regions, not typically seen as an economic powerhouse, are embracing P2P lending as a tool for financial empowerment, thereby bridging gaps and bringing credit access to areas across many geographies.

UPI Convenience Meets P2P Lending

The role of UPI in our lives cannot be overstated in contemporary times. The report notes that around 90 per cent of lenders prefer UPI for adding funds, showcasing a shift towards convenience and speed. With money transfers now more convenient than ever, the P2P lending experience is becoming more streamlined, attracting more participants.

However, the report also notes something that can’t be ignored. Modern lenders are not just young but impatient as well. Over a third of lenders prefer a three-month tenure, while 23 per cent opt for one-month lending.

This shows are the P2P lenders, majorly young, have their eyes fixed on the short-term commitment which could be seen as a desire for quicker returns in little time.

Says Bhavin Patel, co-founder and CEO of LenDenCLub, “Manual lending is a very famous option amongst HNIs and retail customers in the USA and UK. These are more mature markets of p2p lending. India is also following suit and seeing a good surge in manual lending numbers lately.” Patel sees P2P lending as a dual force: offering higher returns for lenders while promoting financial inclusion by enabling credit access in underserved areas.

As the data from 13,107 lenders over the past year shows us, this isn’t just a passing trend but a growing choice for young lenders who would be seeing this as an investment opportunity. However, it is important to understand that P2P lending though may give you high returns, it’s not without risks.