On Friday, India-based peer-to-peer lending platform, i2iFunding, announced its new investor protection fund, Principal Protection Fund, which reportedly will allow investors to have 100% protection against loan defaults.
“The principal protection fund is a step further in our commitment to build a healthy ecosystem. The investors on our platform now significantly reduce the risk of losing their principal because of a loan default. While we ensure that there are no defaults, even if they do happen, we will share the burden with the investors. With this fund, we have increased our skin in the game.”
All investors who lend through i2ifunding will be able to participate in the Principal Protection Fund without any extra charges. The platform noted it will set aside 5% of the disbursed loans to go towards the fund and has already created an initial corpus.
Recently, i2iFunding raised 2 crore (about $300,000 USD) from unnamed angel investors to expand their operations. The funds were received just weeks after the Reserve Bank of India released a consultation paper on peer to peer lending indicating potential capital requirements. The additional funding may help i2iFunding qualify if necessary. Pandey previously stated:
“This round of funding gets us to a comfortable position in terms of the capital requirement that has been set out by the RBI. To expand into the MSME portfolio, we need to hire fresh talents in the field of technology and get consultants to ensure that our credit evaluation methodology for the self-employed and businessmen is robust and full proof.”