Finzy launches personal loan at affordable rate at 7.99%

Finzy, an RBI registered P2P platform, on Monday launched personal loan at 7.99 per cent per annum to help people tide over hardships caused by the COVID-19 pandemic. This is the lowest and best rate of interest that India has ever witnessed on personal loans calculated on reducing balance methodology and standard tenure of 36 months, Finzy said in a statement.

"Currently the best rate of interest in India for personal unsecured loans is 10.50% offered by a select few banks. Today we are launching new Finzy rating grade of A+, with the best rating of A+1 being priced at 7.99 per cent with reducing balance calculations," Finzy CEO Amit More said. Finzy prices its loans on basis of their assessment of credit risk premium as determined by their internally developed credit algorithm which tests a customer repayment capacity against 130 different parameters and assigns 15 different Finzy ratings spanning from 7.99 per cent to 21.99 per cent, it said. "One might think 7.99 per cent is too low a rate for lenders to consider, however, our lenders are not influenced by the interest rate of individual loans, they root for portfolio average return across all their loan exposures," Finzy Chief Technology Officer Abhinandan Sangam said.

With introduction of A+, Finzy would be able to attract salaried borrowers from the best of the corporates who would look to balance transfer their high-cost loans to Finzy. "With the reduction in the lowest rate at Finzy from 10.99 per cent to 7.99 per cent, we expect to further strengthen the portfolio quality for our lenders. We envisage the average ROI of lenders to come down from present 17.50 per cent to around 15 per cent and we know our lenders would be happy with this consolidation of portfolio quality," Sangam said. The effort since inception in 2017 has been to cater to served and under-served borrowers, the company, said, adding, this positioning and focus on credit quality supports the portfolio performance in times of economic difficulty and financial market uncertainty, as the country is experiencing now.