The registration process is quick and easy. A lender simply clicks on the Sign up Now icon, enters some basic information and uploads the documents required. The verification process is generally completed within 24 hours and the lender is notified so that he/she can login and start lending immediately.
Similarly, Borrowers registered on the site are identity/credit/risk assessed. On the basis of their intention, ability and stability to repay loan our automated system provides an indication about the Borrower’s capability to efficiently repay the loan. The rate of interest ranges from 12% to 28% and the loan tenure from 6 months to 36 months.
With the aim to give more choice to Lenders, Lenbor launched the Unrated Borrowers category to cater to borrowers with limited credit history. Due to limited data, it is difficult to assess their risk profile and hence, this segment of Unrated Borrowers is listed at higher interest rates. However, Unrated Borrowers bear a very high risk and loans to these have an increased potential to default. Lenbor provides only automated collections support for Unrated Borrower’s category. Lenbor is only an intermediary providing an online platform to connect borrowers and lenders and as such is not liable in any manner for any default of the borrowers. Hence, we urge you to carefully consider the risk involved before offering loans to these Unrated Borrowers.
To ensure secure, fast and smooth transfer of funds with every transaction on the platform, Lenbor has opened a Lenders Escrow account under the trusteeship of IDBI Bank. Lender’s will get a virtual account number with an IFSC code linked to escrow account. They need to transfer the amount they wish to invest through Lenbor into this virtual account. Once their loan transactions with the borrowers is complete, Lenbor will transfer the amount from the Escrow account directly to the borrower’s bank account. The salient features of this account are:
Lenbor has no right to intervene or option to withdraw money for its own use from this account. Lenders give instruction through Lenbor to ITSL (IDBI Trusteeship Services Ltd.) who in turn will forward these instructions to ICICI for execution. Lenbor cannot do any transactions, only view the transactions done through this account.The trustee will independently audit the operations of this account on a regular basis.A lender can withdraw money from the Escrow account anytime by simply writing to us and the money will be transferred to his bank account within 24 banking hours.
Once a lender has pre-funded the Lender’s Escrow account with the amount he wishes to lend, he can start lending by sending proposals to borrowers. Loan listings are visible on the lender’s dashboard along with relevant financial, credit and personal details of each borrower. Lenders can use this information to make an informed choice and send a proposal to fund the borrower. Offers are accepted on first come first served basis. A lender can fund up to 20% of a borrower’s total loan requirement.
In a democratic lending market, credit-worthy borrowers are much in demand. Such borrowers desire faster funding and disbursement. To help tap into these borrowers, Lenbor offers a new tool. Auto-Invest tool is especially designed to help lenders jump the queue and be the first to invest in borrowers of their choice. Auto-invest is a fully-automated tool that matches Lender’s investment criteria with borrower requirements and provides an indication about the Borrower’s capability to efficiently repay the loan. This is done basis certain criteria selected, approved and activated by the lenders on their respective accounts.
Going forward, all borrower requirements – personal, business, collateralized – will be first fulfilled through automated investment and only any balance requirements, will be listed for manual investment option.
Loan disbursal begins only after the official loan agreement has been signed and the borrower has provided the required number of Post-Dated Cheques towards security and repayment of the first EMI.
Lenbor facilitates the signing of an online, legally-binding agreement between the Borrower and the Lenders. The agreement is available online on the borrower and lender’s Lenbor account. They login to their respective accounts, read and understand the terms and conditions mentioned, “digitally sign” by clicking on the acceptance box under the agreement and the process is complete. The agreement is then sent to both the borrowers and lenders through email for their records. The process, though legally binding just like a physical agreement, is faster and more efficient ensuring faster flow of loan amount from lender to borrower.
Disbursal and Repayments
Loan is disbursed from the Lenders Escrow Account to the borrower’s bank account. After the loan is disbursed, the Lender will receive EMIs on or before the 15th of every month. If a borrower fails to pay an EMI within a stipulated time, a penalty is levied on the borrower which is payable to the lender.
The first EMI is payable by cheque. Thereafter, repayments– EMI and pre-closure – are made through an online, automated procedure. Every month the entire EMI amount is collected directly (through auto-debit) from the borrower’s account to the Escrow account, from where it gets reflected in respective lenders virtual account.
Credit Assessment Methodology
Credit assessment of a borrower is done to understand the risk of default. For this purpose, financial, social and personal background check is undertaken on the basis of certain documents submitted by Borrowers, such as income and bank statements.
Various factors considered by our fully-automated credit evaluation mechanism are:
Stability : Stability is understood on the basis of the nature of borrower’s residence i.e. rented/self-owned, length of stay at the same address, length of employment in the same organization etc.
Ability : Ability is evaluated by studying the borrower’s income & expenditure behavior. For example, a healthy percentage of income saved reflects better ability of borrower to repay his/her financial liabilities.
Intention: Intention is understood by analyzing the past repayment behavior of the borrower towards his financial liabilities. Delayed repayments in past financial transactions reduce the chances of loan approval. For this purpose, bureau reports are procured (with prior consent from the borrower) and evaluated.
Banking Habit : A bank statement helps to judge banking habits of a borrower. Several parameters like average monthly balance, cheque bounce and unaccounted transactions, if any, are taken into consideration for assessment of a borrower’s credit worth.
Verification at different levels: Other than telephonic verification to get first-hand information from the borrowers, Lenbor also undertakes physical verification at both the residence & office address. All documents submitted by the borrower are also verified for forgery using state-of-the-art technology.
Lenbor Rule engine, an in-house algorithm, assigns different weightage to all the above factors to compute a score that helps determine the interest rate, loan tenure and amount at which the Borrower’s loan request can be listed on the platform to secure funding from the lenders.
P2P lending is a market-linked asset class, open to the risk of default. We urge all Lenders to go through default rates, transparently mentioned on the statistics page of the website and understand the risks involved before investing.
At Lenbor, we try to keep default-rate to a minimum by taking numerous steps to mitigate risk. Every borrower registered with us is identity-checked, credit-checked and risk-assessed by our experienced team to ensure that only highly-curated are listed on the platform. The loan is disbursed only after the borrower signs the legally-bound loan agreement. Auto reminders (SMS and Call) are sent to all borrowers 3-5 days before the EMI due date.
However, though we do our best to manage the risk at every step, defaults can happen.
In case of default, Lenbor has a 4-step soft recovery process to collect pending payments on behalf of Lenders.-
- In-house collection team establishes communication with defaulting borrower and follows-up for pending payments (Call/SMS)
- Legally-compliant collection agencies follow-up
- Legal-notice is sent on behalf of the lenders
- Legally-compliant recovery agencies try to recover pending amount on behalf of lenders
All collection and recovery related activity undertaken on defaults, if any, is updated on lender’s dashboard on real-time basis with last action taken. Hence, the lender is not dependent on human interface to stay updated on all phases of recovery and can do so by simply logging in to his account.
Please note that Lenbor provides only automated collections support for Unrated Borrowers. Expenses incurred for sending legal notices and by recovery agency are borne by the lender.
Collection and Recovery Process is on best-effort basis which may not result in recovery and hence the risk of loss of both principal and interest exists. Lenbor is only an intermediary providing an online platform to connect borrowers and lenders and as such is not liable in any manner for any default of the borrowers. We urge you to read all terms and conditions thoroughly and understand all the risks involved before investing.
So, go ahead SIGN UP and take the first step because every penny counts!