Story of PaisaDukan Startup: How it Works, Pandemic, & Future
PaisaDukan is the one of the first online peer-to-peer loan marketplaces and is currently valued over $1M. Learn How this Startup acquired rural India and succeed!
PaisaDukan is a peer-to-peer money lending platform that plans to revolutionize the unregulated lending market all over the country. PaisaDukan started in November 2017 and opened up for commercial use in July 2018. It was started by Rajiv Ranjan, who also founded its parent company BigWin Infotech Private Limited, which is a Non-Banking Financial Company operated for peer-to-peer lending (or NBFC-P2P).
How PaisaDukan Works?
Users can register as either borrowers or lenders and upload relevant documents. Lenders can browse through the list of borrowers and bid money for a loan. Here's a quick and detailed step-by-step guide as offered by www.paisadukan.com:
| Borrowers | Lenders/Investors | |
| 1. | Register as borrowers. | Register as lenders. |
| 2. | Upload relevant documents for verification. | Browse through a list of potential borrowers. |
| 3. | Your loan application gets evaluated. | Bid into the desired loan project. |
| 4. | The loan gets approved. | Funding is approved. |
| 5. | Interest rate and risks category gets assigned | Interest gets assigned. |
| 6. | The loan gets funded. | The loan gets funded. |
| 7. | The loan agreement gets signed. | The loan agreement gets signed. |
| 8. | Money gets deposited into the bank account. | Payment of money to an escrow account |
| 9. | Repayment through e-NACH to the escrow account | EMI gets deposited into the bank account. |
(Source: https://www.paisadukan.com/how-it-works)
Story of Paisadukan and Rural Project
In its early days, PaisaDukan catered to only tier 1 and 2 cities. Limited to the urban region, they quickly realized that the urban market was slowly becoming more and more saturated. So, the company made the informed decision of moving to more rural areas. They started with a 3-month pilot project in the Balarahi village of Madhubani district in the state of Bihar.
In three months, they established that the potential for continuity of business was excellent in the rural areas. It made the company evaluate Rural Lending as their priority business vertical.
When asked by India Infoline about how PaisaDukan and P2P, in general, was changing the credit scenario in rural India, founder Rajiv Ranjan replied, "PaisaDukan has become a financial support system for not just the individuals but families in rural areas. PaisaDukan has been relentlessly aiding families in rural areas by enabling the most required - transparent credit facilities, enabling them to face difficult times of financial instability."
Story of PaisaDukan & COVID
PaisaDukan officially started business in 2018 & it can be said that for most of its lifetime, it has been navigating the pandemic economy. And let's keep in mind that their focus had recently shifted towards the rural region, and those are the worst-hit regions, economically, during the pandemic. It has been interesting to see how it has panned out for PaisaDukan in these years.
A few of the issues that they had to navigate during the pandemic were not operating customer service points (CSPs) for collection activities, borrowers being stuck in different states without proper access to financial services, and limitation of public and personal vehicles for movement.
Their technical teams in Mumbai worked extensively to create simplified links, to make the payments of EMIs and investments through online channels easy for users. Their ground teams also brought services like swiping machines, mobile UPI payments, internet banking etc., to the clients' doorsteps. For people who were unable to pay their EMIs, they were given a choice to opt for RBI's facility of the moratorium and will be able to pay the amount at a later date.
Furthermore, the pandemic has also brought about an up pick of P2P loans in urban areas amid pay cuts and job losses. According to business insiders, with the option for P2P available easily, both urban and rural borrowers have preferred P2P loans over Joint Liability Group (JLG) loans.
Milestones Achieved by PaisaDukan:
- In May 2018, BigWin Infotech Private Limited got an In-Principle Approval from RBI, which enabled them to start their P2P lending operations as an NBFC.
- They were the first company to get this approval, and it was considered a revolutionary step by RBI.
- In June 2018, they upgraded the company's regulatory and operational infrastructure to meet RBI guidelines and finally received the Certificate of Registration (CoR) for their platform PaisaDukan.
- In 2018, they raised a total of $825,000 through seed funding; in installments of $650,000 and $225,000 in April and May, respectively.
- In September 2018, they received the Fastest Growing Indian Company Excellence Award at the 11th on Global Business Opportunities.
- In Marched 2019, PaisaDukan launched in the Madhubani district of Bihar, and in over seven months of operation, they were able to generate more than 1000 loans.
- As of 2021, they are ranked among the top 30 P2P companies in the country.
Analyzing P2P (Peer-to-Peer) Loans:
| Advantages | Disadvantages |
| Online applications and assisted document processing make thing relatively hassle-free. | Passing the credit check will still be meticulous and time-consuming. |
| You can usually access lower interest rates than conventional lenders. | Some P2P platforms might require a registration* and processing fee. |
| You can get loans for a much smaller amount than offered by banks. | The usual credit risks are still applicable. |
| Investors have chances of earning much more when compared to alternatives. | P2P platforms follow strict government regulations in India, so that services might be slightly limited. |
| You don't have to deal with countless individuals; | the P2P platform will be responsible for sorting everything. |
It is no doubt that peer-to-peer lending has changed the loan market drastically, and PaisaDukan has played a crucial role in it. As we still mitigate the pandemic, it is interesting to see which direction this business is heading. And more importantly, what will be the effect of a long term economic slump on a business-like PaisaDukan? Will it fizzle out, or will it be the period they thrive in?