New Delhi: The newly launched Unified Payments Interface (UPI) may not currently be useful for peer-to-peer (P2P) online lending platforms like Peerlend, Faircent and I-lend, but this may soon change.
At present, even if lenders and borrowers transact with each other through UPI , the required information is not disseminated to these third-party platforms. These companies are in talks with the National Payments Corp. of India (NPCI) so that these platforms can be integrated into the system.
The P2P platform allows individual borrowers and lenders to transact with each other without the use of any financial intermediaries like banks. The idea behind this is to promote cashless lending and relatively paperless and hassle free transactions as compared to banks. However, the information about the transaction is available only to the lender and the borrower and not to the third party platform.
Such lending platforms can initiate transaction for loan repayments but will not be informed once these transactions go through.
“UPI is not very useful to us as of now because as a third party we won’t get the loan information unless either a borrower or lender tells us about it," said Shankar Vaddadi, founder of I-Lend.
To address this concern, these companies are in talks with NPCI to help them access such information.
“Technologically, platforms like us can be integrated if NPCI generates Application Platform Interface (APIs) to us which will carry the necessary information about the lender-borrower transactions," said Sanjay Darbha, founder and chief executive officer, Peerlend.
APIs are a set of protocols and tools to build software applications which are used to program an interface. They can allow accessibility of data for all.
Another area of concern is that loan repayments are reaching the correct individual.
“There must be an assurance that these repayments are authentic and are reaching the correct person. For this, a common nodal account can be created (through which payments will flow through) which will keep a track of all repayments done," said Rajat Gandhi, founder and chief executive officer, Faircent.
UPI is an interoperable system launched by the Reserve Bank of India (RBI) and NPCI, which will allow peer-to-peer and peer-to-entity payments by unifying the mobile number, Aadhaar number and the bank account number. The threshold of a single UPI transaction, which is currently ₹ 1 lakh will also be a limiting factor for the P2P lending space as the loan amounts required are of higher values.